The British Pound to Euro (GBP/EUR) and British Pound to Canadian Dollar (GBP/CAD) exchange rates softened in the first half of Tuesday’s European trading while the British Pound to US Dollar (GBP/USD) exchange rate remained in a tight range before UK inflation figures.
Earlier… The British Pound to Euro (GBP/EUR), British Pound to US Dollar (GBP/USD) and British Pound to Canadian Dollar (GBP/CAD) exchange rates all declined in the first part of Monday’s European session as general election fears weighed on the British currency.
Exchange rate forecast for the week ahead… The British Pound to Euro (GBP/EUR), British Pound to US Dollar (GBP/USD) and British Pound to Canadian Dollar (GBP/CAD) exchange rates could be in for massive movement this week with several instances of heavy data days as well Bank of England (BoE) and Federal Reserve speculation.
British Pound (GBP) Exchange Rate Forecast: GBP/EUR, GBP/USD, GBP/CAD
Monday will kick-start the week with UK CBI Trends Total Orders and Trends Selling Prices figures, followed later in the session by the US Chicago Federal Reserve National Activity Index and US Existing Home Sales. Additionally, US Federal Reserve official Stanley Fischer will be speaking in New York which could rock the ‘Greenback’ exchange rate significantly.
At this moment in time, investors are attempting to deconstruct the US Federal Reserve timeframe for interest rate hikes. The central bank has been the subject of heavy speculation as investors attempt to pre-empt the bank’s moves and buy the US Dollar at the best time.
The Euro will also get in on the action with the release of Eurozone Consumer Confidence; in February the index resided at -6.7. The Euro will also be highly influenced with any developments between Greece and its creditors as a new austerity bargain attempts to be struck.
However, Tuesday won’t be a restful day for GBP/EUR or GBP/USD with a major day for data scheduled. Firstly, Markit’s German, French and Eurozone Manufacturing, Services and Composite Purchasing Managers Indexes (PMI) will be published which could offer a fair amount of movement to the Euro.
Meanwhile, the Pound is likely to be preoccupied when the UK Consumer Price Index (CPI) is released. Inflation is an important sector for investors to keep an eye on with the prospect of interest rate hikes by the Bank of England this year.
Despite GBP/EUR and GBP/USD being rocked by UK inflation and Markit PMI’s, the US Dollar could add even more ripples to market trading with the release of US Consumer Price Indexes later on Tuesday. In addition, US New Home Sales, House Price Index and Markit’s US Manufacturing PMI will also emerge and could add an extra dimension to US Dollar trading.
Wednesday will keep up the pressure on the US Dollar with US Durable Goods Orders out for release as well as US MBA Mortgage Applications. UK BBA Loans for Home Purchase will cause British Pound movement, while IFO’s German Business Climate, Current Assessment and Expectations figures will be of moderate influence to the Euro.
Thursday’s forecast to be a little quieter for the Euro, but UK Retail Sales and CBI Reported Sales will keep the GBP/USD, GBP/EUR and GBP/CAD currency pairs on their toes. However, Markit’s US Services and Composite PMI’s will also influence the US Dollar to Euro (USD/EUR), US Dollar to British Pound (USD/GBP) and US Dollar to Canadian Dollar (USD/CAD) exchange rates.
Friday will close the week with US Gross Domestic Product (GDP) stats and Personal Consumption stats.
The Canadian Dollar will see little movement from domestic data with releases extremely thin on the ground. However, the price of oil is likely to play a major part in any ‘Loonie’ exchange rate movement.
Canadian Inflation and Retail Sales Slip: Canadian Dollar (CAD) Exchange Rate Sensitive
Friday saw the Bank of Canada (BOC) Consumer Price Index drop from 2.2% to 2.1% in February in line with forecasts. Furthermore, Canadian Retail Sales slipped to -1.7% in January after December’s positively revised -1.8%.
Central bank statements are scattered throughout the week and are forecast to alter the British Pound to Euro (GBP/EUR), British Pound to Canadian Dollar (GBP/CAD) and British Pound to US Dollar (GBP/USD) exchange rates.
Speculation over whether the Bank of England or the Federal Reserve will be the first to hike interest rates out of the Group of Severn (G7) developed nations is likely to heighten in coming months and the GBP/USD, USD/GBP exchange rates will be extremely sensitive to such a development.
Additionally, any escalation in UK political debate could severely influence the British Pound to Euro (GBP/EUR), British Pound to US Dollar (GBP/USD) and British Pound to Canadian Dollar (GBP/CAD) exchange rates.