The British Pound to Canadian Dollar (GBP/CAD), British Pound to Japanese Yen (GBP/JPY), British Pound to Indian Rupee (GBP/INR), British Pound to US Dollar (GBP/USD) and British Pound to Australian Dollar (GBP/AUD) exchange rates all began Friday’s session softer while the British Pound to Euro (GBP/EUR) exchange rate gained.
BoE Shows Citizens Inflation Expectations Reach Lowest Level Since 2001 – Pound Falls
However, further losses may occur in Friday’s session as the Bank of England’s 12-month inflation expectations announced that Brtitish citizens inflation expectations fell to their lowest level in 13 years.
The year ahead dipped to 1.9%, down from 2.5% in November.
Earlier… The British Pound to Canadian Dollar (GBP/CAD), British Pound to Euro (GBP/EUR), British Pound to Japanese Yen (GBP/JPY) and British Pound to Australian Dollar (GBP/AUD) exchange rates were all trending higher in Thursday’s European session while the British Pound to Indian Rupee (GBP/INR) and British Pound to US Dollar (GBP/USD) exchange rates softened.
Australian GDP Growth Slower than Forecast – ‘Aussie’ Exchange Rate Retains Gains
The Australian Dollar managed to hold onto gains from Tuesday’s session (when the Reserve Bank of Australia (RBA) announced interest rates would remain on hold at 2.25%), after Australian Gross Domestic Product (GDP) stats emerged.
The fourth quarter of 2014 recorded a 0.5% rise Q-o-Q while falling to 2.5% on the year from the previous 2.7%.
Market strategist Chris Weston commented: ‘People were positioned for a slightly weaker number than what’s come out. There will be subsequent easing by the RBA, probably coming through in May. That will keep a lid on any kind of major rallies from here.’
Federal Reserve Beige Book and US ISM Non-Manufacturing Composite Forecast to Impact USD
Meanwhile, the US Dollar is awaiting the release of highly influential data later on Wednesday, which may offer the ‘Buck’ the opportunity to rally. The US Federal Reserve will release its Beige Book which could be significant as it is likely to detail a moderation in economic activity, perhaps most notably in the manufacturing sector.
In addition, the report may comment on the effect a stronger US Dollar is having on the economy.
The US ISM Non-Manufacturing Composite will also be out and is expected to soften ever so slightly, from 56.7 to 56.5.
The neighbouring Canadian Dollar will also be under pressure today with the Bank of Canada (BOC) scheduled to release its latest interest rate decision. BOC policymakers are expected to keep rates at 0.75% after the recent surprise 25 basis point cut.
In addition, the price of oil enjoyed an upswing after Saudi Arabia crude oil prices rose and oil amenities were subjected to air strikes.
Risk manager Tony Nunan commented: ‘This is a sign that prices have bottomed out because it means Saudi is confident in raising prices without being afraid of losing market share.’
The Japanese Yen was offered little support when Markit’s Japanese Services Purchasing Managers Index (PMI) fell from 51.3 to 48.5. Furthermore, the Composite PMI softened from 51.7 to 50.0.
Markit economist Amy Brownbill commented: ‘Expectations regarding business activity over the next 12 months remained positive, with the degree of sentiment the strongest since September 2014.’
The Euro is suffering against other major currencies including the Pound (EUR/GBP) as the European Central Bank is speculated to be struggling to acquire enough government bonds to buy for its latest quantitative easing (QE) programme.
In addition, German, Eurozone and Italian Services and Composite Purchasing Managers Indexes fell below forecasts. Germany was expected to record 54.3 growth in its composite measure but instead fell slightly below at 53.8 instead. The Eurozone composite hit 53.3 in opposition to the 53.5 forecast. However, despite softer-than-forecast growth, some economists remain upbeat.
Economist Howard Archer stated: ‘The much more competitive Euro, sharply reduced oil prices and ECB stimulus seems to be increasingly fostering a more favourable growth environment, and it is notable that overall business and consumer confidence across the Eurozone rose for a second successive month in February to be at a seven-month high.’
The Indian Rupee fell after the Reserve Bank of India (RBI) introduced another rate cut as fears over a stronger currency and softer inflation heightened.
ANZ currency strategist Khoon Goh commented: ‘Given two surprise cuts, [the RBI] will continue to keep the Rupee well supported. The Indian Rupee will continue to outperform other Asian or emerging market currencies. Despite two rate cuts, the Rupee is also high-yielding.’
British Pound Exchange Rate Forecast: GBP/EUR, GBP/USD, GBP/AUD, GBP/CAD, GBP/JPY, GBP/INR
The British Pound exchange rate softened slightly against other currencies when Markit’s Services Purchasing Managers Index (PMI) fell in February from 57.2 to 56.7 instead of growing to 57.5 as forecast. However, the Composite PMI remained steady at 56.7.
UK all-sector PMI edged higher to 57.0 in Feb. On course for +0.6% GDP rise in Q1. Near-record job growth also seen. pic.twitter.com/t6zJ7MWNqn
— Chris Williamson (@WilliamsonChris) March 4, 2015
The Markit report read: ‘The UK Service sector continued to expand at a marked pace during February, supported by another sharp rise in volumes of incoming new business. Faces with higher backlogs and mild capacity pressures, companies recruited additional staff, with the rate of expansion the second fastest in the survey history.’
The British Pound may fluctuate against other majors on Thursday when the Bank of England (BoE) announces its latest interest rate decision.
The British Pound to Euro (GBP/EUR) exchange rate is trading at 1.3780. The British Pound to US Dollar (GBP/USD) exchange rate is residing in the region of 1.5336. The British Pound to Canadian Dollar (GBP/CAD) exchange rate is hovering at 1.9245. The British Pound to Japanese Yen (GBP/JPY) exchange rate resides at 183.4600. The British Pound to Indian Rupee (GBP/INR) exchange rate is trending in the region of 95.2710.