The Pound Sterling to Euro (GBP/EUR) exchange rate began Wednesday’s trading bearish, while the Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates were trending higher.
Earlier… The Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates all declined on Tuesday after upbeat Eurozone PMI’s, weak UK inflation and strong US inflation and House Price figures.
US House Prices rose to a seven-year high on Tuesday when January recorded 7.8% growth. Markit’s US Manufacturing PMI also rose to 55.3 in March from February’s 55.1 instead of declining to 54.6 as forecast.
Earlier… The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates took a dive in the first half of Tuesday’s European trading after the release of upbeat German Purchasing Managers’ Indexes (PMI) while the Pound Sterling to US Dollar (GBP/USD) exchange rate remained in a tight range ahead of UK inflation figures.
However, on the release of the UK Consumer Price Index, the GBP/USD, GBP/CAD and GBP/EUR currency pairs all dropped as inflation fell to 0.0% in February on the year from 0.3%; economists had forecast a smaller decline to 0.1%.
Tuesday officially marks the first time the Consumer Price Index has hit 0.0% since its creation in 1989.
The Office for National Statistics suggested that the decline was accredited to ‘price movements for a range of recreational goods (particularly data processing equipment, books and games, toys and hobbies), food and furniture and furnishings.’
Euro (EUR) Exchange Rate Climbs on Upbeat German and Eurozone PMI’s
The Euro enjoyed a boost from upbeat Markit Eurozone and German Purchasing Managers’ Indexes (PMI) which showed growth was continuing.
Markit’s German Manufacturing PMI rose to 52.4 in March from 51.1, while the Services PMI reached 55.3 from 54.7. The upbeat ecostats allowed the Composite PMI to reach a healthy 55.3 in March from February’s 53.8—any figure above 50.0 denotes expansion.
Markit Economist Oliver Kolodseike commented: ‘It looks like the German economy is entering the economic fast lane again. An improving economic environment and stronger demand from both domestic and foreign markets were some of the reasons behind stronger growth in March.’
The Eurozone data also printed favourably, driven by currency bloc powerhouse, Germany. Eurozone Manufacturing rose to 51.9 in March from 51.0 in February and the Services PMI jumped from 53.7 to 54.3. The overall Composite measure hit 54.1 from the previous 53.3.
US Dollar (USD) Exchange Rate Forecast to Fluctuate on US Consumer Price Index
Meanwhile, the US Dollar is also awaiting highly influential US Consumer Price Index stats which are likely to cause major ‘Greenback’ movement. Economists have forecast core consumer price growth to continue on the year in February, from 1.6% to 1.7%.
Additionally, the US House Price Index and Markit Manufacturing PMI will also surface later in Tuesday’s trading which could impact the US Dollar to Euro (USD/EUR), US Dollar to Pound Sterling (USD/GBP) and US Dollar to Canadian Dollar (USD/CAD) exchange rates.
The Canadian Dollar was offered a little support against the US Dollar (CAD/USD) and Pound Sterling (CAD/GBP) when the price of oil increased. WTI crude oil hit $47 a barrel in Monday’s North American session and remained in that region in Tuesday’s European trading.
Additionally, with speculation regarding US Federal Reserve interest rate hikes playing its part in weakening the US Dollar exchange rate, the ‘Loonie’ has jumped on the opportunity to gain.
Currency strategist Camilla Sutton stated: ‘We’re seeing a bit of CAD strength really on the back of that broader US Dollar weakening.’
Pound Sterling Exchange Rate Forecast: GBP/EUR, GBP/USD, GBP/CAD
The Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates are likely to continue fluctuating in the rest of Tuesday’s session as a result of the weaker-than-forecast UK inflation figures.
Moreover, the Pound Sterling to US Dollar (GBP/USD) and USD/EUR, USD/CAD currency pairs are likely to experience major movement from the US Consumer Price Index later in the session.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is reaching 1.8651. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4910; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3604.
