The Pound fell against both the Euro and US Dollar during trading today following Wednesday night’s approval of a key bill in the Brexit process.
- GBP EUR rate drops to 1.16 – GBP USD rate trends at 1.26
- Pound crashes after Commons votes for ‘Brexit bill’ – BoE improves outlook, no positive effect
- Eurozone data points to rising inflation – US Dollar damaged by US-AU refugee spat
- Pound weakness set to continue on services PMI – US jobs outlook positive, mixed PMI data incoming
The Euro advanced against the Pound and US Dollar in response to the latest Eurozone news, while the US Dollar has slumped after a reported diplomatic incident involving the new President.
Pound Sterling (GBP) Tumbles after Commons Vote, BoE Forecast
Both the GBP EUR and GBP USD exchange rates have fallen notably today, with UK domestic developments and data severely limiting demand for Sterling.
As well as the UK getting a step closer to Brexit, losses have also been caused by the UK construction PMI for January which fell from 54.2 to 52.2, a lower figure than forecast.
Regarding the Brexit news, MPs in the House of Commons voted by a majority to approve the Article 50 bill, which means that the bill is now onto the amendment stage, expected to take place next week.
As well as this lurch towards full Brexit concerning investors, the Bank of England (BoE) leaving interest rates on hold and issuing an ambiguous statement has also lowered demand for the Pound.
The BoE actually upgraded its inflation and growth forecasts for the future, although by less than some investors had been expecting.
Euro Demand Rises on Inflation Implications, US Dollar Crashes on Trump Refugee Controversy
With Eurozone producer price indexes rising in December, the Euro has climbed against the Pound and US Dollar today due to the implied rise in inflation in the future.
The US Dollar has dropped against the Euro but risen against the weaker Pound today; domestic news has seen the Fed leave interest rates at 0.75% and adopt a hawkish tone on the nation’s economic outlook.
However, it is Donald Trump’s alleged hanging up on Australian PM Malcolm Turnbull that has most weakened the US Dollar today, with confidence in USD fading when Trump called a previously agreed refugee transfer scheme a ‘dumb deal’.
Future GBP EUR USD Forecast: Pound Could Suffer after Friday Services PMI
The Pound is expected to round off its trio of negatively-forecast PMIs on Friday morning when the Markit services PMI for January has been forecast to drop from 56.2 to 55.8 points. Should these expectations prove accurate, the Pound is expected to close trading on Friday in a poor position against both the Euro and US Dollar.
The Eurozone still has a significant contribution to make before the weekend, with Friday morning bringing Eurozone-wide retail sales stats along with composite and services PMIs.
The retail results have had mixed forecasts, as while a monthly rise from -0.4% to 0.3% is expected, a slowdown in sales from 2.3% to 1.8% on the year is also predicted.
For the US Dollar, Friday afternoon’s US data is set to be high-impact, covering non-farm payrolls and the unemployment rate in January, as well as composite, services and non-manufacturing PMI results.
The payrolls figures could boost the US Dollar as they are expected to rise from 156k to 175k, while unemployment could have little impact if it remains at 4.7% as forecast.
While the services and composite PMIs are forecast to rise, the more impactful non-manufacturing variant is conversely forecast to drop from 57.2 to 57, potentially weakening USD before the weekend.
Current GBP EUR USD Interbank Exchange Rates
At the time of writing, the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.17 and the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.85.
The Pound US Dollar (GBP USD) exchange rate was trending in the region of 1.26 and the US Dollar Pound (USD GBP) exchange rate was trending in the region of 0.79 today.
The Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.08 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.92 today.