A smorgasbord of bad news is weakening the GBP/EUR and GBP/USD exchange rates today. The shock of a more dovish than expected Monetary Policy Committee meeting yesterday, NHS overspending, new details about George Osborne’s tax deal with Google and rising support for a ‘Brexit’ are all contributing to Pound Sterling’s negative run today. Meanwhile, the Euro is soft after disappointing German Factory Orders figures and the US Dollar is strong ahead of today’s key Non-Farm Payrolls data.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Slides on Growing ‘Brexit’ Support
The last week has seen support for leaving the European Union increase by 3%, despite David Cameron having secured a draft deal on membership reforms ahead of the next Brussels summit. Many of the measures in the deal, including the key ‘emergency brake’ system to curb migrant benefits, have been branded as weak and ineffective, even by Pro-EU campaigners. The new poll by YouGov shows that since a deal was agreed, the proportion of UK citizens wishing to vote to leave the EU has risen to 45%, with 36% wanting to stay and 19% undecided.
Some are arguing that the results should be interpreted lightly, particularly following the disastrous opinion polls ahead of the UK general election, which predicted varying degrees of hung parliament, but never once came close to the Conservative majority that eventually triumphed. There have also been leaked emails showing the levels of infighting within the ‘Leave’ campaign which could jeopardise their ability to secure a referendum win.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading -0.3% down, even though the Euro has been softened by disappointing German Factory Orders figures. The German data showed a -2.7% drop in demand; almost double the contraction expected.
Pound Sterling to US Dollar (GBP/EUR) Exchange Rate Sinks as US Employment Data Approaches
The US Dollar is strong today ahead of the key US Non-Farm Payrolls data; a key measure of the economy that the Federal Open Market Committee will use to gauge the potential for delivering additional rate hikes. Currently the futures market predicts that there will be no additional rate hikes in 2016, despite the Fed continuing to claim that there could be as many as four.
Just one month ago there was a 75% chance that there would be at least one further increase in the coming year, but the market currently puts the probably at 60% in favour of no action. With poor results from both the ISM Manufacturing and Non-Manufacturing indexes, the picture of US economic health is looking increasingly concerning, so today’s jobs figures will need to print well in order to save any hopes the Fed have of delivering another round of policy tightening in March.
Current GBP, EUR, USD Conversion Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading around 1.2973, while the Euro to Pound Sterling (EUR/GBP) exchange rate is trending in the region of 0.7706.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4516, with the US Dollar to Pound Sterling (USD/GBP) exchange rate trading around 0.6889.
