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GBP/EUR, GBP/USD Exchange Rate Forecast: Pound Denied Rally after UK CPI Confirmed a Retreat in Inflation

GBP/USD Down as ‘Greenback’ (USD) Soars on Decreasing Chances of September Fed Hike, GBP/EUR Holding Gains Today

After the ZEW Economic Sentiment Survey printed at a lower level than had been forecast yesterday, slipping from 25 to 21.1, the single currency (EUR) entered another spell of dovishness. With the latest polls suggesting that Sunday’s Greek election is anything but certain the GBP/EUR exchange rate is holding a slight uptrend at 1.3622 this morning.

In spite of Tuesday’s US data falling short, with Industrial and Manufacturing Production in August contracting by a greater degree than anticipated, the ‘Greenback’ (USD) experienced a strong boost. Likely this was the result of decreased bets on an imminent Fed hike, a move that is increasingly viewed as offering potential damage to the US Dollar. As a result the GBP/USD pairing is moving at a narrow downtrend around 1.5340 at present.

Earlier…

A decline in the UK Consumer Price Index demonstrated the continued weakness of domestic inflation, although the GBP/EUR and GBP/USD exchange rates are only experiencing minor downturns as a result.

EUR Hampered by Grexit Concerns, Pound Sterling to Euro Exchange Rate Struggles to Capitalise on Weak UK Inflation Data

Although it was a relatively slow start to the week the single currency (EUR) was temporarily shored up yesterday by the release of unexpectedly positive Eurozone Industrial Production data. Defying expectations of a significant slump on the previous figure, year-on-year output in July rose from 1.5% to 1.9%, surprising traders who had already priced in a more dovish result. Consequently the GBP/EUR exchange rate was pushed lower to 1.3602, as an overall lack of other major economic data prevented any particular degree of extreme movement throughout the rest of the day. Nevertheless, the uncertainty over Sunday’s Greek general election continued to weigh on the prospects of the Euro, allowing the pairing to make some limited gains in the afternoon.

Pound Sterling to Euro (GBP/EUR) Conversion Rate Steady Today after UK Inflation Report

Conforming to forecast, today’s UK Consumer Price Index shrank discouragingly from 0.1% to 0% to deal another blow to the fragile Sterling (GBP). Signalling that the Bank of England (BoE) had not been overly pessimistic in revising the 12-month Inflation Forecast from 2.2% to 2%, this latest disappointment suggests that the recovery of the domestic economy remains slow. As such the Monetary Policy Committee (MPC) seems unlikely to move to raise interest rates until next year, somewhat dampening the more optimistic outlook of some traders.

Euro to Pound Sterling Exchange Rate News: Euro Movement Dependent on ZEW Confidence and 2015 Greek Election

Later today the ZEW Economic Sentiment Survey is also anticipated to print at a slide, with German confidence sinking from 25 to 18.3. However, an equally strong turnaround here could prompt the Euro to take some strong bullish gains, particularly if second quarter employment data for the currency union beats expectations. The single currency is likely to need particularly impressive numbers in order to combat the increasing investor nervousness ahead of Greece’s newest round of elections, however. As it seems decidedly unlikely that former Prime Minister Alexis Tsipras will be able to regain a majority the potential threat of a Grexit continues to loom large over the Euro.

At time of writing the Pound Sterling to Euro (GBP/EUR) exchange rate is shedding value at 1.3650.

‘Buck’ (USD) Waiting for Movement on Upcoming Fed Rate Decision, Declining UK Inflation Pulls down the GBP/USD Exchange Rate Today

Sentiment towards the ‘Greenback’ (USD) over the coming days stands to be primarily driven by speculation over Thursday’s Federal Open Market Committee (FOMC) Rate Decision. After recent domestic data has proved inconclusive for traders trying to guess the direction in which policymakers will ultimately choose to vote this week, the market is struggling to achieve a general consensus. However, opinions ultimately appear to remain confident that monetary tightening will occur before the end of the year if it fails to materialise at the September meeting. Consequently, after dipping yesterday to a low of 1.5381, the GBP/USD conversion rate regained much of its ground to trend narrowly this morning in the range of 1.5436.

This afternoon’s US Retail Sales for August may spur a resurgence for the ‘Buck’, while an improvement or better-than-expected result on domestic Industrial and Manufacturing Production figures could equally boost the currency’s appeal. Similarly, if tomorrow’s US Consumer Price Index proves positive, expectations may rise in advance of the Fed’s decision. Any indicators of a stronger domestic economy will no doubt add fuel to speculation that an interest rate take-off is imminent, with any increase in local inflation certainly capable of adding a compelling argument for policymakers to begin the cycle of tightening.

At time of writing the Pound Sterling to US Dollar (GBP/USD) pairing is trending a little lower at 1.5432.