The Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates were both trending higher ahead of the Bank of England (BoE) inflation report and UK Unemployment Rate and Employment Change numbers, despite a drop in German Gross Domestic Product (GDP) data.
BoE Inflation Report, UK Unemployment Rate and German Gross Domestic Product Data Causes Pound Sterling to Euro (GBP/EUR) Exchange Rate Ripples
The Bank of England’s inflation report is forecast to be rather hawkish as the UK economy gains momentum. Meanwhile, the German Gross Domestic Product stat slipped lower than predictions from a seasonally adjusted 1.4% to 1.1%.
UPDATE: UK labour market data printed favourably; UK Unemployment Rate dropped from 5.6% to 5.5% in March, while Average Weekly Earnings jumped from 1.9% to 2.2%.
Unemployment rate drops to 5.5% and employment rate up to 73.5%. 202,000 more in employment in latest three months. Very good figures.
— David Smith (@dsmitheconomics) May 13, 2015
The Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates were both trending higher on Tuesday after Greece made its International Monetary Fund (IMF) €750 million debt repayment, to the surprise of many.
— Dirk Hoeren (@DirkHoeren) May 12, 2015
Euro to US Dollar (EUR/USD) and Pound Sterling (EUR/GBP) Exchange Rate Forecast
Some industry experts had forecast the possibility of a Greek default, an event that would likely see Greece exiled from the Eurozone and the Euro exchange rate crash.
However, Greek finance minister Yanis Varoufakis has warned on the seriousness of the situation, saying: ‘The liquidity issue is a terribly urgent issue. It’s common knowledge, let’s not beat around the bush… From the perspective [of timing], we are talking about the next couple of weeks.’
With Greece on track to run out of funds in just a few weeks there are doubts surfacing over whether the nation will feasibly be able to make a deal with its creditors in that time. Therefore, the next few weeks will be extremely interesting for Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rate trading.
— The Greek Analyst (@GreekAnalyst) May 11, 2015
— Ian Traynor (@traynorbrussels) May 12, 2015
Pound Sterling to Euro (GBP/EUR) and US Dollar (GBP/USD) Exchange Rate Forecast
Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate was offered enough support to hit a three-month high on Tuesday after UK ecostats surprised to the upside. UK Industrial Production remained at 1.1% on the year in March, rather than softening to 1.0% as forecast. Additionally, the annual UK Industrial Production ecostat jumped from 0.1% to 0.7% in March, a far more favourable result than the 0.1% stagnation prediction.
However, not all the data was favourable on Tuesday; the British Retail Consortium’s (BRC) Like-for-Like Sales slipped majorly from +3.2% to -2.4% on the year in April.
However, the BRC report read: ‘The figures were negatively distorted by the inclusion of the build-up to Easter in March this year against April last year. The 3-month average, which removes the distorting effect of Easter, showed the strongest underlying growth since last June.’
US Dollar to Pound Sterling (USD/GBP) and Euro (USD/EUR) Exchange Rate Forecast
Meanwhile, the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates are forecast for an interesting few days with the release of some influential US data. Tuesday will see the release of the US Monthly Budget Statement which is forecast to come in at $151.5B in April after March’s $106.9B recording.
However, Wednesday’s US Advance Retail Sales number is forecast to register 0.2% growth in March, a much smaller expansion than March’s 0.9%. A soft performance from the US economy could see the US Dollar exchange rate lose favour with investors.
Additionally, the University of Michigan Confidence ecostat is predicted to climb from 95.9 to 96.0 in May, which may offer the USD/GBP and USD/EUR currency pairs some support.
The Euro to US Dollar (EUR/USD) exchange rate is trading at 1.1377; the Euro to Pound Sterling (EUR/GBP) exchange rate is trending in the region of 0.7222.