The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates were both trading higher ahead of the Bank of England (BoE) inflation report, after the UK Unemployment Rate fell from 5.6% to 5.5% in March and UK Average Weekly Earnings leapt from 1.9% to 2.2.
UK Average Weekly Earnings Jump while UK Unemployment Rate Falls Unexpectedly, GBP/EUR, GBP/USD Exchange Rates Climb
Unemployment rate drops to 5.5% and employment rate up to 73.5%. 202,000 more in employment in latest three months. Very good figures.
— David Smith (@dsmitheconomics) May 13, 2015
The possibility of a Bank of England rate hike this year is becoming a very real possibility as UK economic data improves and today’s labour market ecostats are likely to spur speculation on the subject.
Earlier… The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates were both trending lower on Wednesday ahead of the Bank of England’s (BoE) inflation report which is forecast to be hawkish.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending lower on Tuesday after Greece made its International Monetary Fund (IMF) repayment, while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading higher ahead of UK Manufacturing Production and UK Industrial Production data.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending higher ahead of the Brussels finance minister meeting on Monday, while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading lower after the Bank of England (BoE) left both QE and interest rate on hold in May.
Will Greece Make an IMF DEbt Repayment on Tuesday? Euro Exchange Rate Forecast to Fall on a Default
Meanwhile, Eurozone finance ministers have been meeting in Brussels today and are due to issue a statement of progress soon ahead of the Greek IMF debt repayment due on Tuesday. Any failure to make a payment could see the Euro sink against other majors, and the GBP/EUR currency pair could feasibly climb higher into the 1.40s territory.
BoE Interest Rate Decision Forecast to see Borrowing Costs Remain at 0.50% in May
Bank of England maintains #BankRate at 0.5% and the size of the Asset Purchase Programme at £375 billion
— Bank of England (@bankofengland) May 11, 2015
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates are in for another interesting trading week with the UK general election out of the way, Greek negotiations forecast to heat up and some highly influential data such as the Bank of England (BoE) interest rate announcement, due for release.
Meanwhile, Eurozone finance ministers are due to meet in Brussels on Monday which could cause major EUR exchange rate movement dependent on progress.
Today’s #Eurogroup is the 6th since #Greece got a new govt 4 months ago. And we’re still only hoping for a progress-making statement (sigh)
— Maxime Sbaihi (@MxSba) May 11, 2015
Agenda highlights of today’s #Eurogroup meeting: http://t.co/ln32RLjyAQ #ECForecast #Greece
— EU Council Press (@EUCouncilPress) May 11, 2015
#Eurogroup meeting – May 2015: Doorstep @yanisvaroufakis on the situation of #Greece http://t.co/41HjBja98f pic.twitter.com/niQdgvzzh1
— EU Council TV News (@EUCouncilTVNews) May 11, 2015
UK General Election Conservative Win and EU Referendum Bode Badly for Markets and Pound Sterling (GBP) Exchange Rate
As the general election came to a close, influential institutions such as Moody’s jumped in to suggest that the EU referendum could hurt both the economy and the Pound.
Despite the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates both fluctuating significantly this week on account of the UK general election, Monday won’t let the British currency rest with the highly influential Bank of England (BoE) interest rate decision due to be announced.
Moody’s says #brexit “could potentially have consequences for sovereign rating”. Risk hasn’t disappeared following #GE2015 result…
— Jonathan Eley (@JonathanEley) May 8, 2015
The last BoE minutes showed the April policy meeting had found two members of the committee on the precipice of voting for UK interest rate hikes, stating the decision not to was ‘finely balanced’.
Additionally, Monday will see the release of the British Retail Consortium’s (BRC) Like-for-Like Sales stat which is forecast to mildly influence the Pound Sterling exchange rate.
Tuesday will be another influential day for the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates with the release of the UK Industrial Production and Manufacturing Production figures due out for release.
The UK’s NIESR Gross Domestic Product Estimate for April will be another event to watch for on Tuesday with economists forecasting moderate GBP/EUR and GBP/USD market movement.
However, Wednesday’s going to see some spicy Pound Sterling exchange rate trading with UK labour market stats due for release. The release of UK Claimant Count Rate, Jobless Claims Change, Average Weekly Earnings, Unemployment Rate and Employment Change numbers are certainly likely to cause some exciting Pound Sterling movement.
However, the Bank of England will release its inflation report shortly after, which could influence GBP/USD and GBP/EUR majorly, so prepare for an exciting day of trading.
The rest of the week will die down for the Pound Sterling exchange rate with only Friday’s UK Construction Output scheduled for release. Therefore, the British currency could fluctuate on account of general election aftermath and global developments.
The rest of the week will be down to Greek negotiations and global developments for Euro movements. The Greek government recently implemented a political shakeup in its negotiations team which seems to have reignited the slowly diminishing flame of talks between itself and creditors.
US Dollar (USD) Exchange Rate Forecast for Movement on University of Michigan Confidence Stat
Meanwhile, the US Dollar is also forecast for some interesting movement next week on account of several important data releases starting with Monday’s US Labour Market Index Change stat. Tuesday will continue on with the US Monthly Budget Statement release amid Federal Reserve statements.
Wednesday’s forecast to be an interesting day for ‘Cable’ with the release of US Advance Retail Sales and Business Inventories numbers. Advance Retail Sales can have a major impact on the way the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates trade and therefore Wednesday could see some significant sparks in the market.
Friday will close the week with the US Industrial Production, US Manufacturing Production, Baker Hughes US Rig Count and University of Michigan US Confidence numbers published. As the US University of Michigan Confidence data is the most influential data release out on Friday and the market will experience a generally quiet day for domestic data anyway, the US Dollar could experience some more exaggerated swings.
Additionally, the unofficial contest between the US Federal Reserve and the BoE as to who can be the first to hike interest rates is likely to heat up in coming months as investors speculate on whether either nation could be sustain higher borrowing costs.
The BoE was thought to be waiting for the UK general election to be out of the way before adjusting interest rates in case a political shakeup occurred.
Euro Exchange Rate (EUR) Forecast for Major Swings as Greek Negotiations Heat up and IMF Deadline Looms
The Euro is still trading under the umbrella of political uncertainty as Greece and its creditors attempt to reach a deal regarding the nation’s austerity package. However, there could be some significant Euro exchange rate movements ahoy, with Monday pegged as the day for a Greek deal (despite protests that it’s too soon from the Greek government). With Greece, only time will tell, but we forecast that the situation could continue on until July with the nation recently securing enough funds to feasibly limp on until then.
Tuesday (May 12th) could cause some extreme Euro exchange rate fluctuations with Greece expected to make a massive €800 million repayment.
Meanwhile, Wednesday’s forecast to be an influential day for the currency bloc with the German and Eurozone Gross Domestic Product numbers out for release. Additionally, final Eurozone and German inflation numbers could cause Euro movements.
The European Central Bank is also due to release its latest monetary policy meeting minutes which could cause some foreign exchange market ripples.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.5698, while the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3871.