Odds of 2015 Interest Rate Hike Decrease with Dovish Federal Open Market Committee (FOMC) Minutes, ‘Greenback’ (USD) Softens Further Today
The Federal Open Market Committee (FOMC) meeting minutes for September proved decidedly dovish upon release yesterday, further eroding the strength of the ‘Greenback’ (USD). As the Bank of England (BoE) also expressed caution over inflationary outlook the odds of an interest rate rise were pushed back further into 2016. Consequently the GBP/EUR exchange rate has continued to slump in the region of 1.3583, with the GBP/USD pairing remained on an uptrend around 1.5374.
Ahead of the Bank of England (BoE) Rate Decision the Pound (GBP) is softening somewhat against rivals, as the Euro (EUR) sees a resurgence despite a weaker German Trade Balance.
Sterling (GBP) Rally Beginning to Falter as UK Housing Price Figure Falls Short of Forecast
Some of the steam has left the Pound (GBP) on Thursday after the bullish gains made in response to the improved UK Industrial Production data. Yesterday’s NIESR Gross Domestic Product Estimate for September also proved hawkish, as the forecast held steady at 0.5% in spite of recent global economic concerns. However, the RICS House Price Balance released overnight put something of a dampener on the strength of Sterling, defying expectations by clocking in at 44% rather than a more optimistic 55%. Another signal that the domestic economy does not remain in a universal state of recovery, this prompted a general downturn for the currency.
Ahead of today’s Bank of England (BoE) Rate Decision and accompanying meeting minutes, Pound trading has taken on a more cautious note. While investors expect no change in monetary policy, or in the previous session’s 8-1 vote result, the tone of policymakers’ comments will likely be of significant impact. The extent to which the wider global economic climate is concerning the Monetary Policy Committee (MPC) will undoubtedly provoke volatility for Sterling, especially with regards to the odds of a nearer-term BoE interest rate rise.
Weak German Data Fails to Hold Down Euro (EUR) Today, Greece Progresses Positively towards Bailout Review
Germany remains a point of concern for the Eurozone today, as recent weakness in domestic Factory Orders and Industrial Production data was followed up by a disappointing German Trade Balance report. Although the country continues to run at a surplus it was shown to have narrowed by a greater degree than expected in August, falling from 25 billion Euros (EUR) to 15.3 billion. As the Volkswagen scandal rumbles on the prospects for the Eurozone’s economic powerhouse appear to be increasingly grim.
Nevertheless, ahead of the release of the European Central Bank (ECB) September meeting minutes, the single currency has been making gains against rivals. In part this could be attributable to further signs of progress in Greece, as Prime Minister Alexis Tsipras and his government won a parliamentary vote of confidence to clear another of the hurdles between the Hellenic nation and its next tranche of bailout funds.
Economic Slowdown Fears Plague US Dollar (USD) ahead of Federal Open Market Committee (FOMC) Meeting Minutes
The ‘Greenback’ (USD) has remained in a persistent slump as traders continue to grapple with the diminished odds of a 2015 Fed interest rate hike. Domestic data for the US has been generally unimpressive this week, with yesterday’s Consumer Credit figure no exception. MBA Mortgage Applications did show a substantial rise in the last week, rocketing to an increase of 25.5%, but nevertheless failed to counteract the more dovish picture of the local economy.
Upcoming Jobless Claims and the Federal Open Market Committee (FOMC) meeting minutes for September could prompt a rally for the ailing ‘Buck’, although slowdown concerns are likely to remain a dominant thought in the minds of pundits.
Current GBP, EUR, USD Exchange Rates
At time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was in a downtrend around 1.3579, with the Pound Sterling to US Dollar (GBP/USD) pairing climbing in the range of 1.5333. Meanwhile, the Euro to US Dollar (EUR/USD) conversion rate was moving bullishly in the region of 1.1294.