UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.2% whilst the Pound to US Dollar climbed by around 0.5% on Thursday afternoon.
Despite the fact that British retail sales produced disappointing results, the Pound avoided significant losses and posted some moderate gains today. The Euro strengthened across the board thanks to a weak US Dollar and rising Eurozone Currency Account surplus. the US Dollar, meanwhile, softened in response to trader profit-taking and weaker-than-anticipated labour market data.
Earlier…
Pound Sterling to Euro (GBP/EUR) Exchange Rate Predicted to Trend within a Tight Range ahead of ECB Minutes
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range on Thursday morning.
Despite the fact that British economic data produced poor results thus far this morning, the Pound avoided depreciation against most of its rivals. This is likely due to improved bets regarding the timing of a Bank of England (BoE) benchmark interest rate hike now that the Federal Reserve looks increasingly likely to raise rates in December. Also supporting demand for the British asset was yesterday’s speech from BoE Deputy Governor Ben Broadbent who urged investors not to put too much weight on the bank’s inflationary outlook given that market conditions could change in an instant.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4271.
Although the US Dollar weakened in response to trader profit-taking, the single currency has failed to enact a significant appreciation. Even improvement in the Eurozone Current Account wasn’t enough to provoke a marked Euro uptrend. September’s seasonally-adjusted Eurozone Current Account surplus advanced from 18.7 billion to 29.4 billion. On a non-seasonally adjusted basis the Eurozone Current Account Surplus surged from 14.6 billion to 33.1 billion. The static Euro trade today can be attributed to speculation that the European Central Bank (ECB) monetary policy meeting minutes due for publication today will print dovishly.
Pound Sterling to US Dollar (GBP/USD) Conversion Rate Forecast to Edge Higher on US Dollar Overvaluation
The Pound Sterling to US Dollar (GBP/USD) exchange rate edged higher by around 0.2% on Thursday morning.
Today’s domestic data fared poorly which may provoke a Sterling downtrend as the session progresses. October’s Retail Sales advanced by 3.0% on the year which was well below the market consensus of 3.9% sales growth. On the month, October’s Retail Sales contracted by -0.9% despite predictions of a -0.6% contraction. Retail Sales including volatile Auto Fuel also failed to meet with expectations in October.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5266.
The US Dollar surged in response to the publication of minutes from the most recent Federal Reserve interest rate decision. The minutes showed that most policymakers were prepared to vote for a cash rate hike in December. US Dollar gains were short-lived, however, after the significant upswing opened up some attractive selling opportunities. US Dollar overvaluation remains a key concern for traders, however, given the potential for the current high value of the Dollar to drag on economic progress. Later today, US labour market data has the potential to provoke Dollar volatility.
Pound Sterling to Euro and US Dollar Exchange Rates Forecast: GBP to Trend Narrowly ahead of ECB Minutes
Should the ECB’s account of the most recent monetary policy meeting meet with expectations of dovish outlook from policymakers, the resultant Euro downtrend is likely to provoke US Dollar and Pound Sterling appreciation. The US Dollar will rise on negative correlation, whilst the Pound will advance thanks to improved trade prospects against a low valued single currency.
However, there is the potential that fears of overvaluation will see the USD decline as the session progresses. In this scenario the Euro is likely to appreciate and the Pound will continue to trend narrowly.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.4241 to 1.4320.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5231 to 1.5294 during Thursday’s European session.
