The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to Swiss Franc (GBP/CHF) exchange rates both softened in Thursday’s European trading while the Pound Sterling to US Dollar (GBP/USD) exchange rate advanced on broad US Dollar softness.
However, the US Dollar may feel fluctuations from Federal Reserve official James Bullard speaking this morning on the topic of interest rate hikes.
Bullard has suggested that monetary policy should begin to normalise with lower rates creating ‘substantial’ risk.
Bullard stated: ‘Now may be a good time to begin normalising US monetary policy so that it is set appropriately for an improving economy over the next two years.’
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate continued to trend lower in Wednesday’s European session while the Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Swiss Franc (GBP/CHF) exchange rates recorded gains after below forecast US Durable Goods Orders data and dovish Federal Reserve comments surfaced.
US Durable Goods Orders contracted by a whopping -1.4% in February, January’s ecostat was negatively revised to 2.0%, and forecasts had suggested 0.2% growth would occur.
Meanwhile, Chicago Federal Reserve President Charles Evans suggested rate hikes in 2015 should be written off on account of low inflation.
Evans stated: ‘It would be very surprising if inflation did not begin to pick up to 2%, I share the optimism of so many of my colleagues that it will pick up but I just don’t have the same confidence in the time profile of this.’
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate began Wednesday’s European session trading softer after upbeat German IFO stats emerged, while the Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Swiss Franc (GBP/CHF) exchange rates advanced on favourable UK BBA Loans for House Purchase data.
ECB’s QE Lifts Confidence, Euro (EUR) Exchange Rate Climbs
Germany’s IFO Business Climate index rose past the 107.3 forecast to reach 107.9 in March from February’s 106.8. Additionally, the German Expectations stat reached 103.9 after February’s 102.5; economists had predicted a smaller rise to 103.0. The IFO German Current Assessment rose in line with forecasts from 111.3 to 112.0.
The rise in confidence is expected to be a result of European Central Bank (ECB) President Mario Draghi’s latest quantitative easing (QE) programme.
Optimism in core Europe is clearly improving with +ve German Manufacturing PMI yesterday, +ve IFO data … pic.twitter.com/pC2ebKiNpZ
— RANsquawk (@RANsquawk) March 25, 2015
US Dollar (USD) Forecast to Fluctuate on Federal Reserve Statements and Durable Goods Orders
Meanwhile, the US Dollar could be in for some major movement in the second half of Wednesday’s trading with the release of US Durable Goods Orders. In addition, MBA Mortgage Applications will also emerge and could offer some moderate influence to the US Dollar to Pound Sterling (USD/GBP), US Dollar to Euro (USD/EUR) and US Dollar to Swiss Franc (USD/CHF) exchange rates.
Another factor which could make Wednesday an interesting day for US Dollar trading will be Federal Reserve officials speaking. Chicago Federal Reserve President Charles Evans will be speaking on monetary policy which could be a major cause for US Dollar movement. Any hawkish remarks could see the ‘Buck’ rally, while any dovish tones could be cause for US Dollar weakness.
The Swiss Franc recorded gains against the US Dollar (CHF/USD) while softening against the Euro (CHF/EUR) and Pound Sterling (CHF/GBP) after the Swiss UBS Consumption Indicator rose in February from a positively revised 1.11 to 1.19.
However, the Swiss Franc to Euro (CHF/EUR) exchange rate jumped significantly on Tuesday, posting the highest daily gain since the Swiss National Bank (SNB) removed the EUR/CHF cap in January.
Foreign exchange strategist Peter Kinsella commented: ‘The penny has finally dropped that the SNB aren’t going to increase their negative deposit rates, consequently the Swiss Franc is strengthening once again. I won’t be surprised if we are trading pretty close to parity in the Euro-Swiss Franc over the coming weeks and months.’
The Euro to Swiss Franc (EUR/CHF) exchange rate is trending in the region of 1.0492.
Pound Sterling Exchange Rate Forecast: GBP/USD, GBP/EUR, GBP/CHF
The Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Swiss Franc (GBP/CHF) exchange rates were offered some support on Wednesday when the UK BBA Loans for House Purchase stats came in better than forecast at 37.3K in February after January’s 36.4K.
Thursday could be another big day for GBP/USD, GBP/EUR and GBP/CHF movement with the release of UK Retail Sales figures. The Swiss KOF Institute’s Spring Economic Forecast will also be out on Thursday, along with Markit’s US Services and Composite Purchasing Managers Indexes.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is reaching 1.4252. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4886. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3588.