- GBP Exchange Rates Forecast to Struggle – Domestic data disappointed
- EUR Exchange Rates Declined – Draghi warned of future stimulus measures
- USD Exchange Rates Trading Higher – Jobless claims hit 3-month low
- GBP Forecast to Hold Losses – Post-Brexit PMIs expected to disappoint
Post-Brexit PMIs Weigh on GBP Exchange Rates
GBP exchange rates have put on a mixed performance this week with the Pound struggling against both the Euro and US Dollar over the last five days as UK ecostats have painted a mixed picture of the UK’s economic outlook in the period leading up to, and immediately following, the UK’s decision to Brexit from the European Union.
After British ecostats failed to meet with expectations yesterday the Pound softened versus its major peers. Today’s post-Brexit PMIs failed to inspire confidence in the Pound, causing further GBP exchage rate losses. The Manufacturing, Services and Composite PMIs all dropped below the 50 mark that separates growth from contraction; highlighting the immiediate fallout from the Brexit shock.
(Previously updated July 22, 2016 @ 09:03)
GBP Exchange Rates Forecast to Struggle on Post-Brexit PMIs
Yesterday the Pound softened versus all of its major peers after retail sales growth dropped at its fastest pace this year. Today will see the first UK data publications that pertain to a post-Brexit Britain.
Most analysts predict that the Pound will continue to weaken given that the data is forecast to produce poor results. The preliminary result for July’s Manufacturing PMI is forecast to drop from 52.1 to 47.5, crashing through the 50 mark that separates growth from contraction. Additionally, the Services PMI and Composite PMI is also expected to drop below 50.
EUR Exchange Rates Forecast to Tick Lower on Bund Yields
The Euro softened yesterday despite the European Central Bank (ECB) avoiding easing monetary policy. The accompanying speech from President Mario Draghi hinted strongly at additional stimulus measures in the near-future.
With that in mind, damp sentiment is likely to weigh on EUR exchange rates today. Also weighing on demand for the single currency is falling bund yields. This is of particular concern to the ECB given the already limited assets available to purchase.
There will be a number of domestic data publications today with potential to cause EUR exchange rate volatility, however. German and Eurozone Manufacturing, Services and Composite PMIs should all be impactful.
The GBP EUR exchange rate was trending within the range of 1.1920 to 1.2032 during Thursday’s European session.
USD Exchange Rates Predicted to Advance ahead of Manufacturing PMI
Although market sentiment improved yesterday, the US Dollar still managed fractional gains versus its major peers. This was thanks to positive labour market data which saw jobless claims and continuing claims decline beyond expectations.
Domestic data is unlikely to have a huge impact on USD today given that there will only be two reports released. With that said, July’s preliminary result for the US Manufacturing PMI may cause volatility.
Far more likely to be the driving force behind USD movement, however, is market sentiment. If safe-haven demand returns during today’s European session, the US Dollar is likely to advance significantly.
The GBP USD exchange rate was trending within the range of 1.3155 to 1.3269 during Thursday’s European session.