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Pound Sterling to Euro (GBP/EUR) and US Dollar (GBP/USD) Exchange Rates Forecast to Strengthen ahead of Bank of England Super Thursday

UPDATE

The Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.1% on Thursday morning, whilst the Pound Sterling to US Dollar (GBP/USD) exchange rate also ticked higher by around 0.1%.

Today the Bank of England (BoE), in an effort to become more transparent, will release minutes from the interest rate decision on the same day. Governor Mark Carney will also be giving a press conference in which he will talk about the central bank’s economic projections. Additionally, the BoE release the quarterly inflation report. This has been dubbed ‘Super Thursday’ and is likely to cause a significant amount of volatility for the British asset. As traders await this trove of crucial data, the Pound edged higher versus most of its peers amid expectations of dissenters in the Monetary Policy Committee (MPC).

Mixed domestic data results thus far have caused the shared currency to tick higher versus many of its currency rivals. German Factory Orders bettered estimates on both an annual and a monthly basis, but the German Construction PMI saw output growth slow fractionally. The German and Eurozone Retail PMIs have the potential to provoke changes for the single currency.

The US Dollar is holding gains versus its currency competitors after Wednesday’s data showed that the ISM Non-Manufacturing Composite bettered the median market forecast for July. Initial Jobless Claims and Continuing Claims, due for publication later on Thursday afternoon, have the potential to cause US Dollar movement.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4325.

The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5611.

Yesterday…

The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened by around 0.4% on Wednesday afternoon, whilst the Pound Sterling to US Dollar (GBP/USD) exchange rate  gained by around 0.2%.

With traders speculating that the missed estimates for British services output will have minimal impact on future Bank of England (BoE) interest rate decisions, the Pound strengthened across the board.

With the prospect of long delays to Greece’s third bailout package as the subject of debt relief continues to be a stumbling block, the shared currency softened versus its peers. Many analysts predict that Greece will not be able to sustain an economic recovery with its current debt load, but Germany is showing increased reluctance to address this issue.

US economic data produced mixed results. Although Mortgage Applications printed positively, ADP Employment Change and Trade Balance both missed the respective median market forecasts. ISM Non-Manufacturing, however, eclipsed estimates which caused the US asset to climb versus many of its closest currency rivals.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4356.

The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5603.

Earlier…

Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Strengthen after NIESR Warns that a Greek Haircut is Necessary

The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.3% on Wednesday morning.

As Wednesday’s European session began, the Pound was holding a position of strength versus its currency rivals. This was due to the prospect of foreign investment in the Reserve Bank of Scotland (RBS) after the British government sold another chunk of shares. The Pound softened as the session progressed, however, following a lower-than-expected UK services print. The Services PMI was predicted to drop from 58.5 to 58.0 in July but the actual result was 57.4. Additionally, the Composite PMI failed to meet with expectations. However, the Pound was little affected by the data results given that services output is still showing robust growth.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4346.

Despite producing mostly positive domestic data results, the shared currency declined versus many of its currency peers. One particularly disappointing publication was Eurozone Retail Sales which came in at 1.2% on the year in June, missing expectations of a 2.0% growth in sales. The depreciation can also be linked to a global economic growth report from the National Institute of Economic and Social Research (NIESR). The report showed that the situation in Greece has weighed on global economic progress. NIESR’s outlook for global economic growth is bleak even as they factor in the possibility of a Greek debt haircut. Should the Hellenic nation fail to secure some form of debt restructure, NIESR predicts that the situation in Greece will only worsen.

The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.4292 to 1.4354 during Wednesday’s European session.

Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Trend within a Limited Range ahead of US Data

The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a narrow range on Wednesday morning.

Of the British Services PMI, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply stated; ‘Though dislodged from last month, the sector’s growth continued to operate on solid foundations and in an optimistic environment. Respondents reported a few surprises in the form of unexpected new business wins, which contributed to increased backlogs. Overall, activity has continued to rise for 31 months and though the minor easing in growth may raise questions around the continued strength of recovery, recent revised GDP figures for the UK economy confirm the sector’s solidity along with half of the survey’s respondents who were optimistic for the coming months.’

The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5580.

As traders await the US ISM Non-Manufacturing Composite, the US Dollar is generally holding steady versus its currency rivals. A slight appreciation can be linked to positive sentiment after Federal Reserve Bank of Atlanta President Dennis Lockhart said that a September rate hike was appropriate. Traders are showing caution, however, given that the economic slowdown in China could have a detrimental impact on Fed policy decisions.

The Pound Sterling to US Dollar (GBP/USD) was trending within the range of 1.5525 to 1.5606 during Wednesday’s European session.