UPDATE
With a complete absence of British economic data to drive changes, there is a high potential that the Pound will see subdued trade today. However, any significant changes with the Euro or the US Dollar could provoke Sterling changes as a result of market volatility.
The shared currency is trending statically as traders await Eurozone inflation data. This will be significant because the European Central Bank (ECB) is flirting with the prospect of expanding quantitative easing in order to stoke Euro-area price pressures.
Although divergent messages from Federal Reserve policymakers has only fuelled uncertainty with regards to the timing of a benchmark interest rate hike, the US asset is holding steady on Friday morning. The University of Michigan Confidence report will be significant for those invested in the North American asset.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3610.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5477.
Yesterday…
Pound Sterling to Euro (GBP/EUR) Exchange Rate Predicted to Advance on UK Unemployment Drop
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.6% on Thursday afternoon.
Despite a complete absence of domestic data to provoke volatility, the Pound edged higher versus many of its major peers in the early stages of Thursday’s European session. The appreciation is most likely traders continuing to digest the unexpected drop in UK unemployment seen yesterday. Additional gains can be linked to the Shanghai Composite Index recovering yesterday’s losses and posting a 3.2% gain at the close of the Asian session. This is supportive for the Pound because recently Chancellor George Osborne announced the government’s intention to merge the British and Chinese equity markets.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3567.
European economic data is thin-on-the-ground during Thursday’s European session with French, Spanish and Italian data unlikely to have enough weighting to provoke changes for the single currency. Despite this, the common asset softened versus many of its major peers. This was due to news that the Volkswagen scandal is likely to worsen as it transpires a much greater number of vehicles will likely have to be recalled.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3459 to 1.3590 during Thursday’s European session.
Pound Sterling to US Dollar (GBP/USD) Conversion Rate Forecast to Trend Statically after US Consumer Prices Fall
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a limited range during Thursday’s European session.
In addition to unemployment dropping to a seven-year low in the UK, wage growth also remains robust. Although weekly earnings failed to grow in line with expectations, the low inflation rate has led to real wages close to pre financial crisis levels. James Knightley, an economist at ING, stated; ‘With headline CPI in negative territory and employment rising we are seeing substantial increases in real household earnings, which is supporting consumer confidence and should help boost consumer spending growth. This is clearly a positive for domestic activity and offers more evidence to suggest that market expectations of the first Bank of England rate rise being more than a year away seem too cautious.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5470.
As traders await US inflation data, the Dollar is holding a weak position versus its major peers. Divergent policy outlook between Federal Reserve officials and signs of ongoing economic turmoil in the Far East, have caused many traders to delay bets regarding the timing of a Federal Reserve benchmark rate hike. US Consumer Prices bettered estimates by only dropping to 0.0% instead of -0.1% forecast. However, the data had minimal impact given that most traders believe the Fed will delay a benchmark rate hike irrespective of the lack of price pressures.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5413 to 1.5508.
Pound Sterling Exchange Rate Forecast: Subdued Trade Likely on Absence of Data
With a complete absence of domestic data for the remainder of the week, the Pound Sterling is likely to see subdued trade. Any volatility, therefore, will be as a result of wider currency movement. US Dollar positioning should have an impact given that most analysts agree that the Bank of England (BoE) will not hike the benchmark interest rate ahead of the Federal Reserve.
Over the past week, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3350 to 1.3628, whilst the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5203 to 1.5495.
