Pound Sterling (GBP) Holds Uptrend ahead of UK Inflation Data and BoE Speech Today
Ahead of today’s UK Consumer Price Index report and a speech from Bank of England (BoE) Governor Mark Carney the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates are nevertheless continuing to trend higher. Later this morning the Euro (EUR) could soften further if the latest German ZEW Economic Sentiment Survey demonstrates the forecast decline in confidence.
GBP/EUR, GBP/USD Exchange Rates Bullish as Markets Lack Direction
After another day of jittery trading on the world’s stock markets the Pound (GBP) has remained on stronger form against the Euro (EUR) and US Dollar (USD), holding onto its earlier gains as traders lack fresh economic data.
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates are recovering ground on Monday morning after hitting fresh lows on Friday.
Slowing UK House Prices Bolster Appeal of Pound Sterling (GBP)
Demand for the Pound (GBP) has somewhat recovered on Monday morning, with the currency having plunged to fresh multi-month lows against both the Euro (EUR) and US Dollar (USD) ahead of the weekend. Following more dovish Bank of England (BoE) meeting minutes, there has been little incentive for traders to favour Sterling, particularly as recent UK economic data has proven more bearish than not. As Friday’s Construction Output figures showed sharp contractions on the month and on the year in November, investors remained concerned about the possibility of the current bubble within the domestic housing market worsening, helping to push the Pound lower against rivals.
However, this morning’s Rightmove House Prices Index demonstrated that prices had slowed on the year in January, clocking in at 6.5% rather than 7.4%. With concerns slightly eased, and suggestions that the Pound had been oversold in the last week, the British currency has generally returned to a more bullish form today.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Trends Lower Today with Profit Taking
Persistent market risk aversion continued to bolster the appeal of the Euro on Friday, with the common currency also supported by the news that the Eurozone’s trade surplus had widened further than pundits had anticipated. With the currency union’s Trade Balance for November rising from 19.8 to 22.7 billion Euros, the economic prospects of the Eurozone appears to have shaken off at least some of the impact of negative global headwinds. Although European carmakers took another blow as reports emerged of anti-fraud raids on Renault offices this failed to particularly weigh on the stronger single currency for long.
As European Central Bank (ECB) policymakers seem to remain divided over the necessity for the central bank to expand its quantitative easing program in the near future, however, the Euro has been driven down this morning by a round of profit taking.
US Dollar Currency News: USD Softens as Slowdown Concerns Weigh on Odds of FOMC Hike
Sentiment towards the US Dollar softened a little ahead of the weekend, as the prospect of a first quarter Federal Open Market Committee (FOMC) interest rate hike seemed to diminish in the face of continuing global slowdown pressures. Investors were not encouraged by the confirmation that Advance Retail Sales had contracted in December, which suggested a weakening in consumer demand over the critical Christmas season. However, the more negative impact of this figure was quickly mitigated by a stronger-than-expected University of Michigan Confidence Index, as consumer confidence rose from 92.6 to 93.3 in January.
With American markets closed for a national holiday on Monday the ‘Greenback’ will largely be lacking in support today, although continuing stock market volatility could prompt traders to pile back into the safe-haven currency.
Current GBP, EUR, USD Exchange Rates
At the time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was making gains in the region of 1.3117, while the Pound Sterling to US Dollar (GBP/USD) pairing was also trending higher at 1.4299. Meanwhile the Euro to US Dollar (EUR/USD) exchange rate was on a downtrend around 1.0900.