Uninspiring US Data Saw ‘Greenback’ (USD) Weaken as Dovish Bank of England (BoE) Comments Pushed GBP/USD Pairing onto Fresh Downtrend
Thursday afternoon was a somewhat mixed bag for the ‘Greenback’ (USD) as US Durable Goods Orders demonstrated a smaller contraction than had been forecast, at -2.0% rather than -2.3%, while Continuing Jobless Claims failed to fall quite as far as anticipated. However, after fresh commentary from a Bank of England (BoE) policymaker further disappointed hopes of a near-future interest rate raise the GBP/USD exchange rate returned to a downtrend in the range of 1.5225.
A less impressive than hoped BBA Loans for House Purchase figure has prevent the Pound (GBP) from achieving any strong rally today, as the Euro (EUR) remains bullish in spite of some weak Eurozone data.
Hawkish Commentary from European Central Bank (ECB) President Kept GBP/EUR Exchange Rate Down in spite of Falling Eurozone PMIs
Although the outlook of the Eurozone economy suffered with the release of a raft of disappointing September PMIs from Germany and the currency union as a whole, the Euro (EUR) remained on a relatively strong footing yesterday. Of particular concern was the larger than expected drop in German manufacturing output, which slipped from 53.5 to 52 and raised concerns that the economic powerhouse of the Eurozone was not insulated from the effects of the wider global slowdown. As the Pound (GBP) remained decidedly weak in the wake of Tuesday’s increased Public Sector Net Borrowing this ultimately failed to provide the GBP/EUR exchange rate with a rally, leaving the pairing on a strong downtrend throughout the day.
Stronger support materialised for the common currency during the afternoon as European Central Bank (ECB) President Mario Draghi proved generally hawkish with regards to the prospects of the Euro. Contrary to expectations, Draghi iterated that policymakers do not currently see the need for the implementation of fresh monetary loosening measures in order to support the local economy. Consequently the appeal of the single currency only increased, sending the GBP/EUR pairing to a daily low of 1.3614.
Pound (GBP) Boosted by Rising UK House Loans Today as Euro (EUR) Stalls on Lowered German Consumer Confidence
This morning proved a little more mixed for the Euro as German Consumer Confidence was revealed to have slipped further than forecast this month as the IFO Business Climate and Expectations surveys proved more optimistic than anticipated. A more positive outlook from German businesses contrasted with the Current Assessment index, which declined from 114.8 to 114.0 to indicate that slowdown fears continue to weigh on the Eurozone. Consequently the GBP/EUR conversion rate finally began to climb from its recent slump, capitalising on this blow to trader confidence to reach 1.3657.
However, this rally was a little shorter lived than might have been hoped as the UK’s BBA Loans for House Purchase figure printed at a slighter gain than forecast. Thus, in spite of domestic mortgages rising, the health of the housing market has been called into question once again, leaving the Pound struggling to shed its recent bearishness.
Stagnant US Manufacturing PMI Weighed on ‘Greenback’ (USD) after GBP/USD Exchange Rate Hit Fortnightly Low
The odds of the Federal Open Market Committee (FOMC) opting to raise interest rates before the end of the year were lent further weight yesterday as the US Manufacturing PMI held steady at 53. As traders had been braced for a minor decline in output from the world’s largest economy, this spurred the GBP/USD pairing to strike a fortnightly low of 1.5228, driven down by a fresh round of optimism. Nevertheless, this lack of growth was not considered entirely encouraging as stagnating production indicated that the atmosphere of the global economy continues to negatively impact the US and could still prevent the Fed from hiking rates in 2015.
GBP/USD Conversion Rate Trending Cautiously Ahead of US Durable Goods Orders Figure Today
While Sterling is beginning to shake off its sluggishness today, despite BBA mortgage approvals rising to only 46,743 rather than 47,000, the GBP/USD exchange rate is retaking lost ground.
Ahead of the afternoon’s US Durable Goods Orders for August and newest Jobless Claims data sentiment towards the ‘Greenback’ (USD) seems relatively cautious. With forecasts suggesting that goods orders in the last month will have contracted significantly, by -2.3%, the case for a 2015 Fed interest rate rise is expected to take a serious blow. Should these worries prove unfounded, though, the ‘Buck’ could see a surge in trading later today.