Pound Sterling (GBP) Remains Dominant Today as UK House Price Balance Rises
A solid RICS House Price Balance has helped to keep the Pound (GBP) on an uptrend this morning, as the strength of the domestic housing market reassures investors. Confidence in the Euro (EUR) remains muted ahead of the European Central Bank’s (ECB) policy meeting today, particularly after the latest German trade surplus was found to have narrowed further than forecast. Consequently the Pound Sterling to Euro (GBP/EUR) exchange rate has been making gains around 1.2962, while the Pound Sterling to US Dollar (GBP/USD) pairing was trending in the region of 1.4223.
Despite the persistent drag of ‘Brexit’ concerns, Pound Sterling (GBP) has been on bullish form against rivals today after the latest raft of domestic production data bettered forecast.
Stronger UK Industrial Production Figures Prompt Pound Sterling (GBP) Exchange Rate Rally
The ongoing debate over the UK’s future in the European Union has continued to weigh on the Pound (GBP) this week, with the currency trending lower in response to Bank of England (BoE) Governor Mark Carney’s testimony to a parliamentary committee on the matter of ‘Brexit’. As Carney acknowledged that the issue is at least a short-term downside risk to the UK economy, Sterling promptly trended lower against rivals.
Demand for Pound Sterling largely improved this morning on the back of the latest UK production figures. Bettering forecasts, Industrial Production rose from -0.2% to 0.2% on the year in January, while Manufacturing Production strengthened from -1.7% to -0.1%. This stronger showing would suggest that the UK economy had not been so badly impacted by the market turbulence and uncertainty that dominated the beginning of the year as might have been expected.
Euro (EUR) Exchange Rate Volatile in Anticipation of ECB Policy Meeting
Yesterday’s stronger-than-expected German Industrial Production and Eurozone GDP figures helped to shore up demand for the single currency (EUR), bolstering confidence in the health of the currency union. This more bullish data added to speculation that the European Central Bank (ECB) may not ultimately deliver on its hints of further monetary loosening, an outcome investors are wary of following President Mario Draghi’s December under-delivery on rhetoric.
As markets have already priced in a fair degree of easing, these worries saw the Euro climbing across the board, although the increasing atmosphere of uncertainty has since seen the common currency return to a downtrend. Should Draghi satisfy markets with tomorrow’s policy announcement, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to make gains, but any disappointment is set to prompt a fresh bout of Euro strength.
US Dollar Currency News: USD Softens ahead of Wholesale Inventories Data Today
Discouraging trade data from China increased the appeal of the US Dollar (USD) on Tuesday as fresh signs of weakness within the world’s second largest economy prompted a surge of safe-haven demand. A weaker NFIB Small Business Optimism Index further eroded the case for the Federal Open Market Committee (FOMC) to vote to raise interest rates again in the near future, somewhat denting the appeal of the ‘Greenback’.
This afternoon’s Wholesale Inventories data could restore a greater measure of confidence to the US Dollar, however, as traders expect to see a continuing contraction in the inventories of US wholesalers. As declining inventories point towards higher consumer demand, a weaker figure would seem to suggest an improvement in domestic sentiment, offering reassurance as to the outlook of the US economy.
Current GBP, EUR Exchange Rates
At the time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was making gains around 1.2977, while the Pound Sterling to US Dollar (GBP/USD) pairing was on an uptrend in the region of 1.4231. Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate was slumped at 0.7709.