- Pound soft on investor uncertainty – Declines seen across the board
- Euro slides along with Irish services – German construction PMI rose in contrast
- US Dollar mixed ahead of Fed speech – Possible repeat of hawkish comments
- BoE interest rate decision due at noon – Odds on for cut to 0.25%
BoE FINALLY Cuts Interest Rates – Pound Euro Exchange Rate Falls
Although a 0.25% interest rate cut had been broadly expected, the fact that the Bank of England (GBP) did finally cut interest rates at its August policy meeting send the Pound spiralling lower against most of its currency counterparts.
The Pound Euro exchange rate dropped around 1%, hitting a low of 1.1816.
(Previously updated 11:00 GMT)
The Pound has been an unstable option at the opening of the day, with investors being put in a high state of tension ahead of the probable Bank of England interest rate cut at noon today.
Both the GBP EUR and GBP USD currency pairs softened as trading began, although the Pound later firmed to 1.1975 against the Euro and 1.3335 against the US Dollar.
The Euro has also been an unsafe bet, with losses stemming from a falling Irish services PMI for July; by contrast, however, Germany’s construction PMI for the same month has risen from 50.4 to 51.6, bettering forecasts.
The US Dollar has been positive overall, on account of the latest US data showing a rise in employment and in the finalised composite PMI for July as well.
(Last updated August 3rd 2016)
The Pound has made irregular movements of late, having risen in the wake of the falling services PMI for July instead of falling as forecast. This was likely on account of the contraction meeting with estimates, although as the Pound has since dropped off, it seems investors have taken a more measured approach to the UK’s news.
The next major UK economic event will come tomorrow, when the Bank of England (BoE) is forecast to cut the UK interest rate at noon from 0.5% to 0.25%.
The Euro has been an unsafe option for investment lately, having fallen against a number of peers due to mixed Eurozone composite and services PMI results for July, along with varied retail sales data for June.
Tomorrow will bring further Eurozone data releases, covering construction in Germany in July as well as the European Central Bank’s (ECB) economic bulletin.
The US Dollar’s value has increased steadily over the course of the afternoon, with positive outcomes for the Adp employment rate, the composite and services PMIs in July serving to elevate the ‘Buck’ against its rivals. In less positive news, the non-manufacturing PMI fell from 56.5 points to 55.5 against forecasts of a minor rise.
The near-future’s US data will consist of a speech from Fed official Robert Kaplan, as well as reduction-forecast claims results for mid and late July.
(Last updated August 3rd, 2016, 10:20)
Pound Gains on Euro, US Dollar Ahead of BoE Decision
The Pound advanced on both the Euro and US Dollar as Wednesday’s European session continued and the UK’s services PMI printed as expected. There had been concerns that the result may come in below forecasts in light of July’s dismal manufacturing PMI.
The GBP/EUR exchange rate hit a high of 1.1926 while the GBP/USD exchange rate was trending in the region of 1.3344.
(Previously updated 08:00 03/08/2016)
The Pound to Euro, US Dollar (GBP EUR, GBP USD) exchange rates have fluctuated over the week so far but could slide over the course of today and tomorrow as influential services PMI is followed by the Bank of England’s (BoE) hotly anticipated interest rate decision. Economists are expecting some policy adjustments from the central bank.
The Pound has been a surprisingly safe bet for investors recently, though incoming UK data may trigger a major GBP drop off overall.
The Euro has been unsettled by rising producer prices, while the near-future will bring a glut of Eurozone ecostats that could push the single currency back up against its rivals.
The US Dollar has been in a similarly bad way, with recent comments favouring a September interest rate hike falling on deaf ears.
UK Economic News: Pound Sterling made Rapid Recovery Yesterday after Construction PMI Fell
The Pound was unusually buoyant against its regular peers yesterday, recording highs in the region of 1.1874 against the Euro (GBP EUR) and 1.3295 against the US Dollar (GBP USD) in addition to countless other favourable peer movements.
The big news came early, when the UK’s finalised construction PMI for July was announced; against forecasts of a drop to between 46 and 45.2 points, the actual data only saw a fractional shift from 46 to 45.9.
This outcome was undesirable, given that it showed further movement into the contraction range. However, as the most pessimistic fears were not realised, the Pound managed to quickly shrug off the negative influence and rally across the board over the course of the day.
This followed on from Monday’s falling manufacturing PMI result for July.
Euro Mixed on Rising PPI while US Dollar Slipped on Jarring September Rate Hike Calls
The value of the Euro was called into question yesterday, not least because there was a distinct shortage of domestic data.
The most notable development came in the morning, when June’s PPI stats showed a shift from -3.9% to -3.1% on the year and an increase from 0.6% to 0.7% on the month.
In other news, Central Bank of Ireland (CBI) Governor Philip Lane has stated that;
‘Despite some initial fears, we have yet to see the operation of more powerful transmission mechanisms by which ‘Brexit’ triggers a more general international decline in confidence indicators’.
Prior to this, Eurozone manufacturing in July came out mixed on the whole.
In the US, the ‘Buck’ has fallen heavily against a number of peers, with the latest major news consisting of speeches from Fed officials Robert Kaplan and William Dudley.
Both men have spoken in favour of a September interest rate hike, though given continuing global uncertainties about slowing growth, such notions have largely been dismissed as fanciful.
In terms of direct domestic data, the Redbook record of retail sales fell on the year from 0.6% to 0.3% and from -0.5% to -0.69% on the month.
Future GBP, EUR, USD Forecast: Markets Await Key UK Services PMI for Finalised Measure of ‘Brexit’ Impact
The middle of the week promises to be a data-rich day, as a large number of high-impact announcements are due from the UK, the Eurozone and the US.
In the UK’s case, the pessimistically predicted finalised July services PMI is due; an earlier flash estimate revealed a drop from 52.3 to 47.4 forecast. Should the finalised version fail to be revised higher the Pound will could be sent diving.
From the Eurozone, a wide range of composite and services PMIs are due, along with the June retail sales stats across the course of the morning.
Broadly speaking, estimates are for mixed retail sales and falling PMIs for the Eurozone, despite most individual countries having positive outcomes forecast.
The US’s contributions to the mix will come over the afternoon, with the ADP employment change for July coming out along with composite, services and manufacturing PMI results.
Employment is expected to increase by a smaller amount than in June, while the high-impact non-manufacturing composite result has a marginal improvement from 56.5 to 56.7 on the cards.
Recent GBP, EUR, USD Exchange Rates
The Pound Euro (GBP EUR) exchange rate has been trending in the region of 1.1858 and the Euro Pound (EUR GBP) exchange rate has been trending in the region of 0.8434 recently.
The Pound US Dollar (GBP USD) exchange rate has been trending in the region of 1.3301 and the US Dollar Pound (USD GBP) exchange rate has been trending in the region of 0.7521 recently.
The Euro US Dollar (EUR USD) exchange rate has been trending in the region of 1.1215 and the US Dollar Euro (USD EUR) exchange rate has been trending in the region of 0.8920 recently.