The British Pound to Euro (GBP/EUR) and British Pound to New Zealand Dollar (GBP/NZD) exchange rates climbed in Friday’s European session while the British Pound to Canadian Dollar (GBP/CAD), British Pound to Swiss Franc (GBP/CHF), and British Pound to US Dollar (GBP/USD) exchange rates all fell.
The Pound may be sensitive to the Bank of England’s (BoE) inflation report which signalled UK sentiment in inflation growth hit a 13-year low in February.
Earlier… The British Pound to The British Pound to Euro (GBP/EUR), British Pound to Swiss Franc (GBP/CHF) and British Pound to New Zealand Dollar (GBP/NZD) exchange rates were all trending higher in the first half of Thursday’s European session while the British Pound to US Dollar (GBP/USD), British Pound to Australian Dollar (GBP/AUD) and British Pound to Canadian Dollar (GBP/CAD) exchange rates fell.
The British Pound to Euro (GBP/EUR) exchange rate took a dive when European Central Bank (ECB) President Mario Draghi spoke and suggested inflation would remain flat at 0.0% in 2015. However, the ECB has upped its growth forecasts for the year.
The Bank of England also opted to keep interest rates at 0.50% as they have been since March 2009.
Earlier… The Canadian Dollar was offered some support in Wednesday’s North American session when the Bank of Canada (BOC) kept interest rates on hold at 0.75% after recently making a surprise 25 basis point cut.
Economist Charles St Arnaud commented: ‘There were so many investors negative on the Canadian Dollar following the rate cut in January, so probably some of those positions are going to start to be unwound. This will give a short-term boost to the ‘Loonie’.’
However, the price of oil has continually pressured the Canadian Dollar to British Pound (CAD/GBP) exchange rate lower and with the US speculated to be running out of room to store crude, further oil price depreciations could be on the way.
ExxonMobil CEO Rex Tillerson commented on the situation and suggested that the world should ‘settle in’ for a prolonged period of lower oil prices.
Tillerson commented: ‘My view is people need to kind of settle in for a while. There’s a lot of supply out there. And I don’t see a particularly healthy world economy.’
Meanwhile, the US Dollar was offered some support when the Federal Reserve’s Beige Book remained buoyant. However, Friday could be the most influential day for the US Dollar to British Pound (USD/GBP) exchange rate with the release of US Change in Non-Farm Payrolls and Unemployment Rate stats.
US joblessness is expected to fall from 5.7% to 5.6% in February and could be an event to see the US Dollar rally.
Swiss inflation Set to See Franc (CHF) Exchange Rate Fluctuate
The Swiss Franc lost favour with investors when Swiss Finance Minister Eveline Widmer-Schlumpf commented that a new minimum exchange rate could be ‘considered’.
However, Franc trading could heat up again on Friday with the release of Swiss Consumer Price Index (CPI) and Foreign Currency Reserves figures.
The Australian Dollar to British Pound (AUD/GBP) exchange rate enjoyed some support on Thursday after Australia’s Retail Sales stat fell in line with forecasts, showing a gain of 0.4% in January after December’s 0.2% month-on-month increase.
However, Australia’s trade deficit expanded for the 10th consecutive month in January, widening from -503M to -980M.
Australian Dollar Exchange Rate Movements before RBA Announcements Suspect
The Reserve Bank of Australia opted to keep interest rates on hold this week, but concerns were flagged when the Australian Dollar spiked just 37 seconds before the announcement. This follows an Australian Dollar drop just ten seconds before the initial rate cut announcement last month.
ASIC chairman Greg Medcraft commented: ‘It’s a two pronged investigation. The first thing that may come to mind is that there is some form of insider trading. So you know when the announcement was made but then you’ve got to go where the trades are.’
The New Zealand Dollar reached record highs of 97.22 against the Australian Dollar (NZD/AUD) and 0.6869 versus the Euro (NZD/EUR) as commodity currencies strengthen from central bank stability. The New Zealand Dollar is higher yielding due to the RBNZ’s comparatively higher interest rates, increasing investor sentiment in the ‘Kiwi’.
Industry expert Sam Tuck stated: ‘The program announced in January had very few details, so there’s a whole bunch of detail we don’t know about quantitative easing. The ‘Kiwi’ has less liquidity available, so a smaller amount of flow is having a larger impact on the NZ Dollar.’
The Euro could be in for major movement later in Thursday’s session as the European Central Bank is expected to outline the details of its upcoming quantitative easing programme. The ECB’s bank rate decision and follow-up press conference with President Mario Draghi could influence the Euro to British Pound (EUR/GBP) exchange rate quite dramatically as investor speculation currently suggests there aren’t enough sovereign bonds available for purchase.
British Pound (GBP) Exchange Rate Forecast: GBP/AUD, GBP/NZD, GBP/CHF, GBP/EUR, GBP/CAD, GBP/USD
The British Pound is also expected to fluctuate on central bank movements on Thursday, with the Bank of England (BoE) announcing its latest interest rate decision. However, British Pound exchange rate movement is likely to be more muted in the current circumstances as investors don’t anticipate an interest rate hike in the near future.
Forex expert Lee McDarby commented: ‘Certainly nothing will change this side of the General Election and very unlikely this side of the year. Interest rates are always on the periphery [for the British Pound].’
The British Pound to Canadian Dollar (GBP/CAD) exchange rate is trading at 1.8938. The British Pound to Australian Dollar (GBP/AUD) exchange rate is hovering at 1.9537. The British Pound to New Zealand Dollar (GBP/NZD) exchange rate is residing at 2.0285. The British Pound to Canadian Dollar (GBP/CAD) exchange rate is reaching 1.8939. The British Pound to US Dollar (GBP/USD) exchange rate is trading at 1.5251. The British Pound to Swiss Franc (GBP/CHF) exchange rate is trending in the region of 1.4770.
