Pound Sterling exchange rates are firmly on the decline today, with GBP EUR and GBP USD slumping even as the US Dollar is softened by profit-taking.
- GBP EUR, GBP USD slump – Another Brexit legal challenge further clouds economic outlook
- Euro advances on US Dollar weakness – No downside surprises likely from day’s Draghi speech
- US Dollar softened by profit-taking – Oil market uncertainties give investors good opportunity to realise election gains
- GBP EUR, GBP USD exchange rate forecasts – Market sentiment remains key on quiet data day
The Euro is advancing thanks to the weakening US Dollar, which has nonetheless managed to hold strong gains versus the Pound.
Pound Soft after RBS Fails Bank of England Stress Tests
Update, 30/11/2016, 08.44; The Pound has softened against the Euro and the US Dollar after Royal Bank of Scotland was found to have failed the Bank of England’s (BoE) stress tests. Nearly three-quarters of RBS is owned by the public.
UK Consumer Credit Growth Strongest Since Before Credit Crunch
Update; Consumer credit growth in October accelerated above forecast, increasing 1.62 billion after September’s was revised higher to 1.48 billion. Additionally mortgage approvals showed strong demand, clocking in at 67,500; over 2,500 more than was forecast. This is yet another indicator to suggest the UK’s vote for Brexit has not damaged the UK economy.
GBP EUR, GBP USD Recovering ahead of Consumer Confidence Data
Update; The Pound is rebounding today after yesterday’s slump on the latest Organisation for Economic Co-operation and Development (OECD) forecasts. Today, a leaked set of notes suggests that the government intends to leave the single market completely in order to prioritise immigration – something that investors are likely to respond negatively to.
Pound Slump Worsens as OECD Issue Gloomy Post-Brexit Forecasts
Update; The Organisation for Economic Co-operation and Development (OECD) has released its latest global forecasts today. The Pound slide has intensified after the organisation projected weaker growth in 2017 and 2018 than either the Bank of England (BoE) or Office for Budget Responsibility (OBR) have forecast. According to the OECD, the UK economy will growth just 1.2% next year and 1% in 2018. This would be the slowest pace of growth for the nation since the 2009 recession, which was sparked by the financial crash.
Pound Exchange Rates Slump as Cross-Party Ministers Warn against ‘Hard Brexit’
An alliance of Conservative, Labour and Liberal Democrat MPs has today published a report warning that the UK economy would be damaged in ‘almost every sector’ by a ‘Hard Brexit’. The report, which was commissioned from the Centre for Economics and Business Research (CEBR) by members of the three parties, found that manufacturing would be hit by tariffs and creative industries by tighter immigration controls restricting access to talent.
In the latest signs of growing discord in Parliament, Labour’s Chuka Umunna, Conservative Anna Soubry and Liberal Democrat Nick Clegg will appear together at an upcoming Open Britain event, in an attempt to press for a ‘Soft Brexit’.
Umunna commented that;
‘Every major sector of our economy is linked to the single market and could be harmed through an arrangement that prioritises one sector over another.’
Pound Slides versus Euro as Empty Eurozone Data Calendar Limits EUR Risks
There could be further disruption to Theresa May’s plans to trigger Article 50 by the end of March 2017 as lawyers from British Influence are planning a legal challenge over the government’s apparent decision to leave the single market.
According to British Influence Deputy Director Jonathan Lis;
‘The single market wasn’t on the ballot paper. To leave it would be devastating for the economy, smash our free trading arrangement and put thousands of jobs at risk. Why should people not only throw the baby out of the bathwater, but the bath out of the window?’
If the government attempts to retain single market access, however, it is likely to be conditional upon the EU waving freedom of movement. But in yet another sign this is unfeasible, Polish Prime Minister Beata Szydlo has warned that the UK will need to ‘compromise’.
Meanwhile, the Euro is on the advance thanks to US Dollar weakness. With little on the calendar to shock either currency, it is likely this morning’s bullishness will continue and the lack of potential downside risks is therefore supporting EUR appetite.
Pound US Dollar Exchange Rate Weakens despite Profit-Taking on USD
Having risen firmly in the wake of Donald Trump’s US election victory, the US Dollar has now found itself at the centre of a bout of profit-taking. Trump’s plans for economic stimulus and enormous market odds on a Federal Reserve interest rate hike next month have seen USD exchange rates advance. Despite this, the Pound remains on the decline; USD GBP did not rally as strongly after the election as other US Dollar-denominated pairings, as the results sent markets fleeing to the Pound.
Investors have chosen to realise their gains today due to the current unease in the oil markets. The Organisation of the Petroleum Exporting Countries (OPEC) is in talks to potentially cut oil production to boost global prices. This is creating significant volatility in the markets, causing many investors to withdraw from the US Dollar – which is affected by oil prices due to the impact this meeting’s outcome could have on the US oil industry – to the even safer Japanese Yen.
GBP EUR, GBP USD Exchange Rate Forecast; Sparse Data Leaves Political Drivers in Control
There is no notable UK or US data set for release today. While Mario Draghi, the European Central Bank (ECB) President, is scheduled to give a speech at the European Parliament today there is little chance of negative surprises. Draghi has already commented recently that Eurozone monetary policy needs to stay weak in order to fuel growth in the currency bloc, so the potential for downside shocks to the Euro are limited.
With the latest Brexit legal challenge talk and news of discord amongst MPs highlighting how little the markets currently know about the government’s negotiating intentions or plans, Pound Sterling could remain on bearish form for the rest of the session. Should news emerge that the backlash against a ‘Hard Brexit’ may be working to soften the government’s approach, GBP exchange rates could quickly recover.
Interbank GBP EUR, GBP USD Exchange Rates
At the time of writing, the interbank Pound Euro (GBP EUR) exchange rate was trading in the region of 1.16, while the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.85.
The Pound US Dollar exchange rate was trending around 1.24, while the US Dollar Pound was trading in the region of 0.80.
The Euro US Dollar (EUR USD) exchange rate was trading around 1.06, while the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.93.