In spite of the third quarter UK GDP having been revised down this morning, the Pound (GBP) has continued to retake some of its recently lost ground against the Euro (EUR) and US Dollar (USD).
Pound (GBP) Exchange Rates on Uptrend despite Negatively Revised UK GDP
Some strong disappointment hit the Pound (GBP) yesterday after the revelation that UK Public Sector Net Borrowing had risen further than expected in November. Clocking in at 13.6 billion Pounds rather than 11.1 billion, this unimpressive report suggested that Chancellor George Osborne will struggle to meet the fiscal targets set out in his Autumn Statement. This increase in government debt prompted traders to move away from Sterling, a trend exacerbated by the fact that Martin Weale of the Monetary Policy Committee (MPC) made rather dovish comments with regards to the possibility of a Bank of England (BoE) interest rate hike. As Weale had previously been considered one of the more hawkish BoE policymakers this helped to push the Pound lower against rivals throughout trading on Tuesday.
Although the Pound resumed an uptrend on Wednesday morning the ailing currency was denied a stronger rally as third quarter UK GDP was revised lower. Slowing more significantly than forecast to 2.1% instead of 2.3%, this weaker performance in annual growth will put little pressure on the BoE to start its latest cycle of monetary tightening sooner rather than later.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Trends Higher Today as French Growth Slows
Tuesday saw the single currency buoyed by improved German Import Price Index and GfK Consumer Confidence Survey readings, as pundits reacted positively to these latest signs of strength within the Eurozone’s powerhouse economy. With the impact of the Volkswagen emissions scandal and global slowdown pressures apparently more limited than expected, the Euro made bullish gains across the board. However, a downwards revision of third quarter French GDP has dented demand for the common currency today as France’s economy was shown to have stagnated at growth of 1.1%.
US Dollar Currency News: USD Weakens in Anticipation of Durable Goods Orders Slump
While third quarter economic growth in the US proved weaker than initially assumed, the finalised reading equally failed to slow as far as investors had anticipated, slipping to 2.0% rather than 1.9%. This stronger showing helped to shore up the ‘Greenback’ as Personal Consumption was also found to have bettered forecasts, increasing from 2.9% to 3.0%. As this suggested that the world’s largest economy remains in a stronger state and helped to allay fears that the Federal Open Market Committee (FOMC) had acted prematurely in raising interest rates last week, the GBP/USD exchange rate was driven to an eight-month low of 1.4808.
With this afternoon’s US Durable Goods Orders forecast to show a marked decline in domestic output, however, the US Dollar has generally softened.
Current GBP, EUR, USD Exchange Rates
At the time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3587, with the Pound Sterling to US Dollar (GBP/USD) pairing making gains around 1.4844. Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate was slumped at 1.0923.