Newsflash: Pound Broadly Gains after UK Retail Sales Jump
The Pound advanced on both the Euro and US Dollar on Thursday as the UK released far stronger-than-anticipated retail sales data for April.
Sales had been forecast to increase by 0.2% on the month, but they actually jumped by 1.2% – resulting in an annual figure of 4.7%.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.4023
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5653
Newsflash: GBP/EUR Above 1.40 on Greek Concerns
As the European session progressed the GBP/EUR exchange rate rallied back above the 1.40 level as the Greek situation inspired broad-based Euro weakness.
Tomorrow’s PMI’s for the Eurozone are likely to inspire further movement.
GBP/EUR Holds Gain, GBP/USD Movement Limited after BoE Minutes
While the Pound Sterling to Euro (GBP/EUR) exchange rate gained as a result of growing fears that Greece will default on its next debt repayment to the International Monetary Fund, neither the GBP/EUR or GBP/USD pairings experienced much movement following the publication of the Bank of England’s meeting minutes.
The minutes added nothing new to the information supplied in the central bank’s recent inflation report and showed that all nine members of the Monetary Policy Committee (MPC) currently believe that interest rates should stay at record lows.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading in the region of 1.3973
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trading in the region of 1.5534
If the Bank of England (BoE) meeting minutes show divided opinions on the subject of interest rate increases the Pound Sterling to Euro (GBP/EUR) exchange rate could climb above 1.40 and the Pound Sterling to US Dollar (GBP/USD) exchange rate may recoup previous losses.
Breaking News: UK Consumer Price Inflation Falls, Pound Sterling to US Dollar (GBP/USD) Exchange Rate Brushes 1.54, Pound Sterling to Euro (GBP/EUR) Exchange Rate Holds Gains
With UK inflation moving into negative territory in April, both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates declined on Tuesday.
Although it had been forecast that the UK’s year-on-year non-core CPI would hold at 0.0%, it actually fell to -0.1% after a smaller-than-expected monthly gain.
The core measure of inflation also eased from 1.0% to 0.8%.
The result saw some investors push back their UK interest hike expectations and the Pound initially shed over one cent against the US Dollar and pared previous gains against the Euro.
While the Pound Sterling to US Dollar (GBP/USD) exchange rate consolidated losses and hit a lot of 1.5445 after the US Housing Starts and Building Permits numbers impressed, the Pound Sterling to Euro (GBP/EUR) currency pair staged a rebound.
European Central Bank (ECB) quantitative easing speculation, disappointing ZEW economic sentiment surveys for Germany and the Eurozone and the ongoing Greek bailout discussions kept the Euro under pressure and the GBP/EUR exchange rate recovered from a low of 1.3823 to trend in the region of 1.3980.
The Eurozone’s own inflation data printed as expected, at 0.0% on the year, and had little impact on GBP/EUR trading.
Industry Expert Reactions to UK Deflation – First Negative CPI Since 1960
Labour Shadow Chancellor Chris Leslie stated; ‘Any relief for households is welcome, but this month’s figures reflect global trends and doesn’t change the reality that many are still struggling to pay the bills. The Government must clearly guard against the risk that business investment might be deferred. We need stronger action now to raise productivity to deliver sustainable growth and rising living standards.’
Economist Alan Clarke noted; ‘Enjoy it while it lasts because there is a good chance that inflation will be back in positive territory next month. The emphasis is largely symbolic and it shouldn’t have come as a surprise to most people.’
Investec official Philip Shaw observed; ‘We suspect today’s numbers will not significantly change the shape of the UK policy debate with the position remaining that the next move in UK interest rates is most likely to be up, rather than down.’
Minutes from Bank of England (BoE) Policy Meeting Expected to Spark Currency Market Movement – Split Vote Could Boost Pound Sterling (GBP)
On Wednesday the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates could climb if the minutes from the latest Bank of England (BoE) policy meeting show that the Monetary Policy Committee (MPC) were split on whether or not interest rates should be increased immediately.
So far this year, all nine members of the MPC have supported keeping borrowing costs on hold, but the last batch of minutes revealed that the decision was becoming more ‘finely balanced’ for two members – namely the hawkish Martin Weale and Ian McCafferty.
Should Weale and McCafferty have voted for immediate interest rate adjustments this time out, the Pound will probably advance on the majority of its currency counterparts.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – FOMC Minutes, Eurozone Data to Inspire Further Fluctuations
While the BoE minutes will be a major cause of GBP/EUR and GBP/USD exchange rate movement tomorrow, the Pound Sterling to Euro pairing may also fluctuate in response to Eurozone’s Construction Output data.
Encouraging construction figures could lend the Euro support.
Similarly, the minutes from the last Federal Open Market Committee (FOMC) meeting are scheduled for publication on Wednesday and have the potential to spark considerable ‘Greenback’ movement.
Dovish minutes would push the safe-haven currency lower.
Today the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3905, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5502, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7186 and the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.6450