Newsflash – Pound Softens after UK CPI Disappoints
As the European session progressed, the Pound declined against both the Euro and US Dollar in response to the latest UK inflation data.
While core CPI fell to 0.8% on the year, the non-core measure came in at -0.1% in April.
This move into disinflation, while predicted by the Bank of England, still had a negative impact on the Pound and saw the British currency extend losses against the US Dollar and pare gains against the Euro.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3886
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5543
Earlier…
Newsflash – Despite Reports of Greek Deal, GBP/EUR Rallies to 1.39 before CPI Data
Ahead of the publication of the UK’s potentially influential CPI report, the Pound was holding in the 1.56 range against the US Dollar but managed to advance beyond 1.39 against the Euro.
Although reports indicate that Greece is closer to reaching an agreement with its creditors, concerns over a potential deal’s sustainability (and the likelihood of Germany agreeing to the measures proposed) undermined demand for the common currency.
With a run of influential ecostats set for publication, GBP/EUR and GBP/USD movement can be expected in the hours ahead.
Earlier…
With the UK general election-inspired Pound rally now over, the Pound Sterling to Euro (GBP/EUR) exchange rate continued trending in the region of 1.37 while the Pound Sterling to US Dollar (GBP/USD) exchange rate softened to 1.56 ahead of the release of the latest UK inflation data.
Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Exchange Rate News – UK Construction Output Increases, but Reduced UK Interest Rate Hike Expectations Limit Sterling Demand
Although the UK released encouraging Construction Output data on Friday, both the GBP/EUR and GBP/USD exchange rates came away from recent highs before the weekend.
The Pound Sterling to Euro (GBP/EUR) exchange rate eased back to 1.37 on profit taking while the Pound Sterling to US Dollar (GBP/USD) exchange rate moved away from 1.58 in spite of the US releasing yet more concerning ecostats.
UK Construction Output was shown to have risen by 3.9% on the month in March following a positively revised decline of -0.3% in February.
Economist Howard Archer said of the UK construction data; ‘Survey evidence on construction activity has consistently portrayed a healthier picture than the hard data in recent months, although the purchasing managers did report a significant loss of momentum in April which was seemingly influenced appreciably by increased uncertainty ahead of the general election.’
Pound Sterling to Euro Exchange Rate Forecast – GBP/EUR Falls from 7-Year Highs but Euro Struggles as Greece on the Verge of Default, Greek PM Tells Creditors the Nation Can’t Pay
As the Pound Sterling to Euro (GBP/EUR) exchange rate advanced to a seven-year high of around 1.40 last week, investors engaged in a bit of profit taking and the pairing accordingly fell before the weekend.
However, the GBP/EUR exchange rate stabilised at the 1.37 level on Monday as the situation in Greece weighed on Euro sentiment.
Reports indicate that Greek Prime Minister Alexis Tsipras approached the Hellenic nation’s creditors and informed them that the nation would probably default on its next debt repayment if emergency funds aren’t released.
In the view of analysts with JP Morgan Chase; ‘The point where collateral is exhausted is likely to be near. Pressures on central government cash flow, pressures on the banking system, and the political timetable are all converging on late May-early June.’
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a low of 1.3728
Greek concerns meant that the GBP/EUR exchange rate managed to hold steady on Monday in spite of the UK’s latest Rightmove House Price report revealing a dip in values.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News – US Consumer Confidence Falls, but Conflict in Middle East Supports US Dollar Ahead of US Inflation Data
On Friday the US Dollar recorded losses against a number of its peers as the University of Michigan Confidence gauge printed at 88.6 in May, a sharp decline from the reading of 95.9 recorded in April.
As no change in sentiment had been anticipated, this result added to the growing stream of less-than-impressive US data weighing on Fed rate hike expectations.
However, the ‘Greenback’ staged something of a rebound on Monday and the Pound Sterling to US Dollar (GBP/USD) exchange rate lost around 0.3% over the course of the European session.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a high of 1.5676
The US Dollar rallied against the Pound and other major pees as the escalating conflict in the Middle East inspired a spike in demand for safe-haven assets.
The US NAHB Housing Market Index isn’t likely to have too much of an impact on GBP/USD trading – unless it prints extremely poorly – but investors will be looking ahead to Friday’s potentially influential US Consumer Price Index.
As a reading of -0.2% has been forecast, the ‘Greenback’ could close out the week trading in a softer position.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: UK Inflation Data Ahead, BoE Minutes In Focus
On Tuesday both the Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Euro (GBP/EUR) exchange rates are likely to experience volatility as a result of the UK’s Consumer Price Index.
If inflation rises unexpectedly the Pound could climb, but if the Consumer Price Index moves into negative territory it will place downward pressure on Sterling.
The GBP/EUR exchange rate could also experience volatility as a result of the Eurozone’s own inflation data and the ZEW economic sentiment indexes for Germany and the Eurozone.
The GBP/USD exchange rate, meanwhile, may fluctuate following the publication of the US Building Permits and Housing Starts numbers.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7275, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5677, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6378, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3740
