The Pound Sterling to Euro (GBP/EUR), Pound Sterling to Singapore Dollar (GBP/SGD) and Pound Sterling to Philippine Peso (GBP/PHP) exchange rates all took a tumble in Tuesday’s European session after UK core inflation slipped from 1.2% to 1.0% in March on the year.
The Singapore Dollar experienced an upbeat day on Tuesday, climbing by nearly 1.0% versus the Pound Sterling (SGD/GBP) after Singapore’s Gross Domestic Product (GDP) Growth Rate remained steady at 2.1% on the year in quarter one.
Quarter four of 2014 had recorded a healthy 4.9% growth and industry experts had expected Q1 of 2015 to only reach 0.7%. However, the actual ecostat registered a much more upbeat 1.1% and therefore the annual figure was able to maintain its Q4 gain instead of tumbling down to 1.9% as forecast.
As a result, the Monetary Authority of Singapore (MAS) opted to keep monetary policy unchanged rather than easing policy further as some experts had suggested.
Barclays economist Wai Ho Leong commented: ‘It’s a reflection that growth is not at risk of falling beneath the government’s forecast. It’s a recognition that the economy could benefit from lower oil in the second half of the year.’
But not all economists believe that further easing won’t occur in coming meetings.
Westpac foreign exchange strategist Jonathan Cavenagh suggests that core inflation pressures could impact policymaking decisions, saying: ‘This creates the risk of an easing at the next meeting in October or another inter-meeting move.’
Singapore Dollar (SGD) Exchange Rate Under Federal Reserve Rate Hike Pressure
However, long-term the Singapore Dollar is expected to fall against the US Dollar (SGD/USD) with the US Federal Reserve likely to begin hiking interest rates later this year.
Credit Suisse currency strategist Heng Koon How commented: ‘We continue to expect the SGD to weaken against the USD, heading into the anticipated Fed rate hike in September. We are maintaining our three-month forecast of 1.40, followed by 12-month forecast of 1.43.’
Philippine Peso to Pound Sterling (PHP/GBP) Exchange Rate Climbs Despite Industrial Production Drop
Meanwhile, the Philippine Peso still managed to climb against the Pound Sterling (PHP/GBP) when the Philippines Industrial Production figure contracted further in February on the year, defying forecasts to rise.
The February ecostat registered a -2.0% drop from -1.8% in January, a far cry from the upbeat +2.0% forecast.
The Philippine Statistics Authority (PSA) stated: ‘Value of Production Index (VaPI) decelerated as it posted an annual decrease of 2.0% in February 2015, according to the preliminary results of the Monthly Integrated Survey of Selected Industries (MISSI). Ten major sectors showed significant decreases in VaPI as follows: furniture and fixtures (-51.9%), petroleum products (30.8%), footwear and wearing apparel (-19.6%, rubber and plastic products (-16.3%) and chemical products (-15.9%).’
Pound Sterling to Euro (GBP/EUR), Singapore Dollar (GBP/SGD), Philippine Peso (GBP/PSP) Exchange Rate Forecast
Meanwhile, economists had a surprise when Eurozone Industrial Production rose by 1.6% on the year in February rather than coming in at 0.8% as forecast. The month of February registered a healthy 1.1% gain, defying predictions for only 0.4% growth.
The Pound Sterling exchange rate wasn’t fortunate enough to be supported by UK data on Tuesday as the UK core inflation measure slipped from 1.2% to 1.0% on the year in March, the lowest level since July 2006.
UK ONS The Consumer Prices Index (CPI) was unchanged in the year to March 2015, that is, a 12-month rate of 0.0% #GBP #BoE
— Shaun Richards (@notayesmansecon) April 14, 2015
The Pound Sterling to Euro (GBP/EUR) exchange rate is forecast for a choppy day of trading on Friday with the release of UK Unemployment Rate, Employment Change and Average Weekly Earnings stats.
Furthermore, G-20 finance ministers are to meet in Washington on Friday and will be discussing the ongoing Greek situation, which has played havoc with the Euro exchange rate in recent months.
Final Eurozone Consumer Price Index stats will also be out during Friday’s European session.
The Pound Sterling to Philippine Peso (GBP/PHP) exchange rate is reaching 64.2593. The Pound Sterling to Singapore Dollar (GBP/SGD) exchange rate is trading at 1.9944; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3859.