The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates spiked on Friday after Bank of England (BoE) Governor Mark Carney spoke on the topic of interest rates, and investors awaited Federal Reserve Chairwoman Janet Yellen’s monetary policy speech.
The Pound Sterling to Euro (GBP/EUR) exchange rate began trending higher in Friday’s session, despite a larger-than-forecast slip in the UK Nationwide House Price Index. The ecostat fell to 5.1% on the year in March from 5.7%, rather than meeting the 5.3% prediction.
The Nationwide House Price Index recorded only 0.1% growth in the month of February; economists had expected 0.2% after January’s -0.1% contraction.
Nationwide chief economist Robert Gardner commented: ‘Economic conditions have remained supportive, with labour market conditions continuing to improve and mortgage interest rates close to all-time lows.’
‘Nevertheless, the pace of housing market activity has remained subdued, with the number of mortgages approved for house purchase in January around 20% below the level prevailing one year ago.’
BoE’s Carney Pushes Pound Sterling to Euro (GBP/EUR) and US dollar (GBP/USD) Exchange Rates Higher
However, the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates could be in for major movement as Bank of England (BoE) Governor Mark Carney speaks in Frankfurt this morning.
Additionally, BoE chief economist Andrew Haldane and Deputy Governor Ben Broadbent will also be speaking.
Carney suggested that ‘the next move in interest rates is likely up’ which caused the Pound Sterling exchange rate to jump.
$GBPUSD moving up & further away from $1.48 on those Carney comments.
— Chris Beauchamp (@ChrisB_IG) March 27, 2015
Meanwhile, the Euro is putting on a mixed performance amid negotiations between Greece and its creditors as the nation attempts to gain a better austerity deal. As talks are ongoing, the Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates may continue to fluctuate as investors price in the possibility of a ‘Grexit’.
Thursday saw German finance minister Wolfgang Schauble suggest that lower interest rates within the Eurozone are causing problems in Germany—the currency bloc powerhouse.
Schauble commented: ‘A low interest rate leads to a misallocation of resources with all the risks and side-effects that you see when bubbles are forming.’
Schauble has also announced his distaste for the current quantitative easing (QE) programme that the European Central Bank (ECB) announced this month.
Schauble stated: ‘ In my view, expansionary monetary policy and high leverage are not the solution but the main causes of the financial and debt crises of recent years.’
The US economy could be stepping away from lower interest rates in the near future as economists attempt to use economic data to forecast interest rate hikes. Thursday was a rather upbeat day for the US economy when Markit’s Services Purchasing Managers Index (PMI) jumped from 57.1 to 58.6, rather than dipping to 55.7 as forecast.
Friday could be another influential day for the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates with the release of US Q4 Gross Domestic Product, Personal Consumption and University of Michigan Confidence figures.
Furthermore, Federal Reserve Chairwoman Janet Yellen is scheduled to speak later in Friday’s American session. Yellen is expected to speak on the topic of monetary policy, and the tone of her comments could cause major market movement.
The Pound Sterling to US Dollar (GBP/USD) exchange rate began Friday’s session trending lower, but after BoE Governor Mark Carney spoke on the topic of interest rate hikes, began to rise.
Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates could also fluctuate on the back of geopolitical tensions as the conflict between Saudi Arabia and Yemen continues.
Meanwhile, Monday could be a big day for GBP/EUR and GBP/USD movement with the release of UK Net Consumer Credit, Mortgage Approvals and Net Lending Secured on Dwellings stats, as well as the German Consumer Price Index, Eurozone Industrial Confidence, Services Confidence and Economic Confidence and US Personal Consumption Expenditure figures.
The Pound Sterling to Euro (GBP/EUR) exchange rate is trading at 1.3693; the Pound Sterling to US Dollar (GBP/USD) exchange rate is trending in the region of 1.4816.