UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.4% on Thursday morning, whilst the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending narrowly.
After the RICS House Price Balance missed estimates in September, the Pound softened versus many of its major peers. The forthcoming Bank of England (BoE) interest rate decision isn’t expected to provoke Sterling volatility given that policymakers are very unlikely to vote to raise rates at this juncture. However, the accompanying minutes should be of interest with any dissenting policymakers likely to provoke a Sterling rally.
The shared currency advanced versus its major peers despite disappointing German trade data. The uptrend can be linked to speculation that the European Central Bank (ECB) still has plenty of scope to expand monetary stimulus if necessary. The ECB minutes, due for publication later on Thursday afternoon, will be unlikely to have a huge impact on the single currency given the most recent interest rate decision came before data which showed Eurozone inflation dropped to -0.1%.
Given that the last Federal Open Market Committee (FOMC) interest rate decision came prior to data which showed the US labour market conditions deteriorated considerably, today’s release of those meeting minutes won’t be hugely impactful. The US asset continues to hold a weak position with traders speculating that the Federal Reserve will look to delay a benchmark rate hike for the foreseeable future.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3579.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5331.
Yesterday…
GBP/EUR Conversion Rate Predicted to Rally after German Industrial Production Output Cools
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.7% on Wednesday afternoon.
Although British economic data produced mixed results on Wednesday, erring towards the negative, the Pound advanced versus its major peers. The appreciation can be linked to a report from the International Monetary Fund (IMF) which forecast robust British economic growth in the face of a global economic slowdown led by China. Saying the economy was ‘solid but weaker than in 2014,’ the IMF added that ‘continued steady growth is expected, supported by lower oil prices and continued recovery in wage growth.’ Maurice Obstfeld, the new IMF chief economist, said; ‘Recovery is most advanced in the US and the UK where monetary policy looks likely to tighten soon.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3601.
Over the channel, disappointing domestic data had a negative impact on demand for the common currency. Although a number of poor ecostats have had minimal impact of late, thanks to a weak US Dollar and negative correlation, Wednesday’s data seems to be the straw that broke the camel’s back. On an annual basis, German Industrial Production saw 2.3% output growth in August, missing the median market forecast 3.3%. On the month, August’s German Industrial Production contracted by -1.2% despite the market consensus of 0.2% growth.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3495 to 1.3637 during the early stages of Wednesday’s London session.
Pound Sterling to US Dollar (GBP/USD) Commercial Spot Rate Projected to Hold Gains despite Positive US Mortgages Data
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced by around 0.6% on Wednesday afternoon.
British economic data produced a mixed-bag of results on Wednesday. On the year, the BRC Shop Price Index contracted by -1.9% in September. Annual Manufacturing Production declined by -0.8% in August; missing the market consensus of a -0.2% contraction. However, August’s Industrial Production advanced by 1.9% on the year; eclipsing the median market projection of 1.2% output growth. Both the monthly readings for August’s Manufacturing and Industrial Production data bettered the respective market forecasts. The NIESR Gross Domestic Product Estimate for September had minimal impact having met with expectations of 0.5%.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5312.
Although the IMF cited the US as one of the few economies likely to see robust growth amid a global economic slowdown, the ‘Greenback’ (USD) declined versus its major peers on Wednesday. Even a hawkish speech by Federal Reserve policymaker John Williams wasn’t enough to improve demand for the North American asset. The slowdown is mostly the result of a succession of disappointing ecostats that will likely cause the Federal Open Market Committee (FOMC) to delay a benchmark rate hike for the foreseeable future. In addition, the environment in which we see a China-led global economic slowdown will not be one in which the Fed will be comfortable tightening monetary policy. MBA Mortgage Applications surged by 25.5% in the week ending October 2nd, but the data had minimal impact with trader focus dominated on potential Fed delays.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5221 to 1.5328 during Wednesday’s European session.
Pound Sterling Forecast: NIESR GDP Estimate to Provoke Volatility, Traders await BoE Minutes
Although damp sentiment towards the shared currency and the ‘Buck’ (USD) will likely see the British asset hold gains, there is the potential for Sterling volatility in response to the forthcoming NIESR Gross Domestic Product Estimate for September. However, unless there is a significant surprise the Pound should hold gains versus its closest rivals.
Thursday will be of significance for those invested in the British Pound. The Bank of England (BoE) interest rate decision isn’t likely to be particularly impactful in and of itself (given that very few economists expect the central bank to change policy at this juncture) but the accompanying minutes will be of interest. Should the minutes indicate that one or more policymakers felt it appropriate for an immediate hike the Pound is likely to rally significantly.
