Pound Sterling (GBP) exchange rates ended last week on a low note, on account of renewed concerns about when Article 50 would be triggered and begin the formal process of the UK exiting the European Union.
Sterling subsequently dipped against both the Euro (EUR) and US Dollar (USD) after rallying on Thursday in response to better-than-anticipated UK retail sales figures. The sales data helped to alleviate some concerns that the UK’s decision to Brexit from the European Union in late June would push the nation into recession.
- Pound softened by speculation on April A50 Trigger – UK retail sales better-than-expected
- Euro softened by weak close to the week – ECB account pointed to caution
- US Dollar boosted after Fed hawkishness – Damage warning for repeated interest rate freezes
- UK GBP data expected on Friday – US GDP also due along with Eurozone confidence scores
The Euro closed off trading in an unfavourable position last week, while the US Dollar ended strongly thanks to Fed remarks.
On Monday the Pound firmed against both the Euro (GBP/EUR) and US Dollar (GBP/USD) as a result of a short covering rally.
With the Eurozone’s preliminary PMIs for August ahead, further Pound/Euro movement is likely. As it stands the pairing is trading in the region of 1.1626.
(Previously updated 22/08/2016)
UK Economic News: Pound (GBP) Unsettled as Borrowing Results Come Under Fire
Last week’s big UK domestic data came over Thursday and Friday, when initially, July’s UK retail sales appeared to have soared post-Brexit. This was quickly picked apart, however, and the brief GBP rally quickly faded when it was concluded that summer tourism and a weak Pound had caused the result.
A similar situation occurred on Friday, when a borrowing surplus boost was similarly quashed by economists. Closing off UK news was the Pound-shattering speculation that Article 50, which would start the UK’s final exit from the EU, would come as late as April 2017; this was rapidly denied by Downing Street.
Euro (EUR) Left Rudderless by Eurozone Data, US Dollar (USD) Rallied after Fed Comments
The Euro’s value was low across the board over Friday, mainly due to uninspiring data out of the Eurozone over the day. Earlier on in the week, the European Central Bank (ECB) trigger concern when its July account indicated a desire to moderate speculation.
The US Dollar had a particularly positive end to the previous week, owing to hawkishness from Fed official John Williams.
Speaking about the long-term, Williams warned that leaving rates on hold could end up damaging the US economy, therefore a short, sharp rate hike in the near-term could be in order.
Future GBP EUR USD Forecast: UK/US GDP & Eurozone PMI’s to Impact Exchange Rates
Major data out this week will come from the UK, Eurozone and US, though the UK’s releases are expected to be lesser compared to the other two contributors.
UK stats will cover pessimistically-predicted Confederation of British Industry (CBI) results for August, which are due on Tuesday and Thursday, as well as Q2 second estimate GDP growth rate stats. In the case of GDP, increases are forecast on the quarter and the year.
A glut of Eurozone announcements are expected, covering PMI flashes for August on Tuesday and German Ifo and Gfk confidence surveys over Thursday and Friday.
Most of the PMI flashes for the composite, manufacturing and services fields are expected to fall, while German’s confidence results have broadly more positive forecasts made for their outcomes.
From the US, Tuesday and Wednesday will bring home sales results, while Thursday has an optimistically predicted durable goods orders announcement for July due.
As with the UK, the US will close the week on GDP stats, which have also been forecast for a rise. Fed Chair Janet Yellen is expected to give a speech during the evening, which could give the US Dollar one last jolt before trading closes.
Recent GBP, EUR, USD Exchange Rates
At the time of writing, the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.1544 and the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.8668.
At the time of writing, the Pound US Dollar (GBP USD) exchange rate was trending in the region of 1.3064 and the US Dollar Pound (USD GBP) exchange rate was trending in the region of 0.7655.
At the time of writing, the Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.1324 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.7655.