UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -1.0% on Thursday afternoon, whilst the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending statically.
As had been expected, the Bank of England (BoE) held the overnight cash rate and cut growth forecasts. What wasn’t expected is that policymakers voted unanimously to hold rates, with Ian McCafferty reversing earlier calls for an immediate rate hike with the low inflation outlook and external risks weighing on confidence. Many traders now don’t expect the BoE to hike rates until 2017 and inflation is projected to remain below target for at least two years.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3017.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4574.
Earlier…
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Soften despite Weak European Data
The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.3% on Thursday morning.
The British Pound strengthened versus some of its major peers on Thursday morning after domestic data produced mixed results. January’s Halifax House Prices advanced by 1.7% on the month in January, significantly higher than the 0.1% growth forecast. Halifax House Prices also advanced by 9.7% in the three months leading up to and including January, bettering the median market forecast 9.0% growth. A somewhat less desirable data result, however, was January’s annual New Car Registrations which saw growth of 2.9%, well down from the previous figure of 8.4%. The mixed domestic data results caused the Pound to endure a mixed faring versus its currency rivals, erring towards depreciation amid speculation that the Bank of England (BoE) will be dovish in its policy outlook.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3122.
Despite the fact that European economic data delivered poor results, and in spite of a dovish speech from European Central Bank (ECB) President Mario Draghi, the Euro strengthened versus most of its major peers. The appreciation is likely to be in response to US Dollar weakness thanks to EUR/USD negative correlation. Also, traders seem to be taking Draghi’s dovish outlook with a pinch of salt as many were caught out after his persistent down-talk failed to meet with action following the most recent policy meeting. Today’s European data showed German, Eurozone, French and Italian Retail PMIs all continued to contract in January. However, a positive result from Germany’s Construction PMI softened the blow from declining retail sales.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Climb after Disappointing US Non-Manufacturing Growth
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced by around 0.5% on Thursday morning.
In response to the Halifax House Price data, Economist Martin Ellis stated; ‘The imbalance between supply and demand continues to exert significant upward pressure on house prices,’ said Ellis, housing economist at Halifax. ‘This situation looks set to persist over the coming months. Further ahead, increasing affordability issues, as price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease.’
Responding to the British New Car Registrations data, SMMT Chief Executive Mike Hawes said: ‘January’s solid performance puts the new car sector in a good position to start the year. Providing consumer confidence remains strong, we expect a more stable 12 months ahead, broadly similar to 2015 which was, of course, a record year.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4654.
As traders await US labour market data and the final figure for December’s Durable Goods Orders, the US Dollar softened versus nearly all of its most traded currency rivals. Dollar weakness was initiated yesterday following disappointing domestic data results. Of particular detriment to ‘Greenback’ (USD) demand was slower-than-expected services output and a below forecast result from the ISM Non-Manufacturing PMI. Also hindering Dollar gains is a return to trader risk-appetite as rising global stock values caused heightened demand for high-yielding assets, thus reducing the appeal of the safe-haven US Dollar.
Pound Sterling (GBP) Exchange Rate Forecast: ‘Super Thursday’ to Provoke Significant Volatility
Part of the reason for the Pound’s mixed faring today is uncertainty regarding the slew of data due to be released by the Bank of England (BoE) later today. Whilst very few expect any changes to the benchmark interest rate at this juncture, the accompanying meeting minutes will likely give a good indication as to policymaker outlook. What’s more, the BoE’s inflation report will be very closely scrutinised by traders given that low inflation has been one of the principle concerns preventing tighter policy. All this should provoke significant GBP volatility today.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.2974 to 1.3170.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.4528 to 1.4668 during the early stages of Thursday’s European session.
