The Pound Euro and Pound US Dollar exchange rates have been soft today, although the major UK news has actually been broadly positive.
- GBP EUR rate rises to 1.19 – GBP USD trades at 1.26
- Pound demand limited despite rising wage growth – Incoming BoE rate decision expected to see another freeze
- Euro investors uncertain over Greek debt crisis – EZ PMI windfall expected on Thursday
- US Dollar traders tense ahead of Fed rate decision – Hike in US interest rate widely expected
Movement in the Euro to Pound and US Dollar exchange rates has been limited owing to fears that further Greek debt issues may be incoming.
While the US Dollar is unlikely to move much today, the evening’s high-impact Fed news could spark volatility.
Pound Exchange Rate News: Sterling Drops Off after Rising Wage Growth Fails to Lend Support
The Pound Euro and Pound US Dollar exchange rates have deteriorated today in an unusual market response to the latest UK news.
Tuesday saw inflation rise higher than expected in November, while today’s wage growth for October has also risen instead of slowing as expected.
While this outcome would usually help defuse inflationary fears, the inflation rise is broadly expected to have overridden any benefit from climbing wages.
Euro and US Dollar Interest Limited on Greek Debt Issues and Trump’s Market Meltdown
The Euro has been trading tightly against the Pound (EUR GBP) and the US Dollar (EUR USD) today, with the latest developments in Greece doing little to inspire long-term EUR confidence.
The latest development has been that EU and International Monetary Fund (IMF) officials have clashed over how to implement stability controls over the troubled Greek economy.
Raising the spectre of ‘Grexit’ once again, the situation has highlighted the catch-22 nature of Greece’s situation, where it must implement harsh policy measures to satisfy creditors, but risk further civil unrest and spiralling domestic conditions as a consequence.
The US Dollar’s performance against the Euro and the Pound has been middling, owing to high tension before an expected Fed interest rate hike.
Previous US Dollar-influencing news was negative, with President-Elect Trump triggering another market crash with a single critical social media post.
Future GBP EUR USD Forecast: Predicted Fed Rate Hike to Boost US Dollar Demand
Any further GBP EUR USD exchange rate movement is likely to come from the day’s remaining US news, starting with November retail sales figures.
On both the month and the year, declines are expected, though any negative impact from these results could be mitigated by the evening’s Fed interest rate decision.
Since November, this has been widely expected to bring a rate hike, although given the high expectations of investors, an actual hike might not cause a long-lasting USD rally.
Following this announcement will be Thursday morning’s Eurozone PMIs for December, which could boost the Euro given Eurozone-wide forecasts for rising services, composite and manufacturing figures.
For the UK, Thursday morning is set to bring falling retail sales in November, while noon has the last Bank of England (BoE) interest rate decision of the year.
As it stands, the BoE is expected to leave interest rates on hold, but could devalue the Pound by releasing a dovish forecast for 2017.
Current Interbank Exchange Rates
The Pound Euro (GBP EUR) exchange rate was trending in the region of 1.18 and the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.84 today.
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 1.06 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.94 today.