After British Gross Domestic Product registered the slowest growth since 2012, the Pound softened versus most of its major peers. The Euro is generally holding steady versus its major rivals with a lack of domestic data to provoke volatility. The US Dollar declined versus many of its most traded currency competitors in response to Monday’s disappointing data.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Soften despite Ongoing Greek Woes
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.23% on Tuesday morning.
British economic data produced mixed results on Tuesday, erring towards the negative, which has seen the Pound soften versus many of its major peers. 1st-quarter Gross Domestic Product was forecast to advance by 2.6% having registered growth of 3.0% previously, but the actual result only saw a 2.4% increase. The slower-than-forecast pace of growth has been blamed on pre-election jitters amid political uncertainty.
Chancellor of the Exchequer George Osborne stated that the continued growth in the quarter was ‘good news’ and attempted to turn the slowdown to his advantage. In a post on his Twitter feed, he said this is a ‘critical moment and reminder you can’t take recovery for granted.’
‘With me you keep the jobs, you keep the growth, you keep the security,’ Leader of the Conservatives David Cameron told a campaign event in north London Tuesday. ‘Please think about the risks to our economy and to our future.’
Whilst growth data printed disappointingly, Loans for House Purchase increased beyond the median market forecast, which softened the blow somewhat.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3966.
The Euro, meanwhile, is trading somewhat statically on Tuesday with a complete absence of domestic data to provoke volatility. A slight depreciation can be linked to ongoing concern over the heightened potential of a Greek exit from the Eurozone.
Those fears have eased slightly, however, after the Greek government replaced the Finance Minister Yanis Varoufakis with Greek Deputy Foreign Minister Euclid Tsakalotos, who is now taking the reins in the Eurogroup meetings. Hopes that Tsakalotos will have a better working relationship with Eurozone officials have seen fractionally improved investor confidence.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a range of 1.3945 to 1.4016.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Advance ahead of US Data
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed by around 0.24% on Tuesday morning.
Although the Pound softened considerably after the GDP results printed unfavourably, the Pound held gains against the US Dollar. The US Dollar declination can be attributed to a succession of disappointing data results and fears that this will lead the Federal Reserve to delay tightening monetary policy.
‘I don’t think the Fed will have the necessary ingredients in place for a rate hike in June, but I expect economic growth and job gains to accelerate during the summer and that will lay the basis for a rate hike at the September meeting,’ said Mark Zandi, chief economist at Moody’s Analytics.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5257.
US Consumer Confidence data, due for publication later on Tuesday, will be of significance in terms of the provocation of US Dollar volatility. Although confidence is forecast to improve from 101.3 to 102.5, traders are naturally cautious given the string of poor data results of late.
The previous US consumer confidence data improved significantly, which was attributed to positive labour market data. Given that recent labour market data has printed disappointingly, there is a high likelihood that consumer confidence will follow suit.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5174 to 1.5265.