Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Tick Lower despite Soft German Imports
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.2% on Wednesday afternoon.
With an absence of domestic data to provoke volatility and with trader focus dominated by the forthcoming Federal Open Market Committee (FOMC) interest rate decision, the Pound has seen comparatively subdued trade today. A slight overall depreciation can be attributed to ongoing concern regarding delays to a Bank of England (BoE) benchmark rate hike following slower-than-forecast third-quarter domestic growth.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3845.
Despite weaker-than-forecast German data, the shared currency edged higher versus its major peers on Wednesday. November’s German Consumer Confidence met with expectations of a drop from 9.6 to 9.4, but German Imports unexpectedly contracted on both a monthly and annual basis in September. The lack of impact on the Euro from said data is likely to be due to negative correlation with the US Dollar. With traders hesitant to invest in the US asset ahead of the FOMC rate decision, the single currency edged higher.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Holds Steady: How will the Fed Approach Policy?
The Pound Sterling to US Dollar (GBP/USD) exchange rate was was trending within a limited range.
Although the British asset declined versus many of its currency rivals today, Sterling appreciated versus the antipodean assets. After data out of China showed that Consumer Sentiment declined significantly in October, Asian share prices saw renewed volatility. Whilst the drop in China’s stock values is not positive for the UK (given recent announcements of much closer ties between the two nations) it is more detrimental to the Australian Dollar and New Zealand Dollar.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5327.
Whilst the majority of analysts do not expect the Fed to hike the cash rate today, the accompanying press conference is likely to be revealing. The words will be closely scrutinised in the hope that there will be greater clarity with regards to the timing of a benchmark rate hike. Should the accompanying speech prove hawkish, the US Dollar will likely surge across the board. Overvaluation concerns may cause policymakers to err on the side of caution with regards to predicting future policy shifts, however.
Pound Sterling (GBP) Exchange Rate: Volatility Forecast as Markets React to FOMC
With traders waiting on seat edges for the FOMC rate decision and accompanying press conference, market volatility is likely to heighten significantly in the immediate aftermath. The Pound will be caught up in the market changes, especially given that most economists don’t expect the BoE to move on rates before the Federal Reserve.
With several British economic data publications due for release on Thursday, Sterling volatility has the potential to continue for the remainder of the week, although a lack of influential data on Friday could see demand cool.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3797 to 1.3884 during Wednesday’s European session.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5280 to 1.5314 during Wednesday’s European session.