The Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates were all trending lower despite UK Public Sector Net Borrowing figures improving in February.
The ecostat came in at 6.2B after January’s -8.9B, a decline of 34% on the year. Finances are expected to have seen a boost from income taxes.
Additionally, the UK CBI Business Optimism Index will be out later in the session and could influence the GBP/EUR, GBP/CAD and GBP/USD exchange rates.
Meanwhile, the US Dollar has been forecast by HSBC to fall after having an impressive bull run. One reason HSBC predict a softer US Dollar exchange rate is a result of potential interest rate hikes in the near future by the Federal Reserve.
HSBC stated: ‘The USD weakens in the early months of a Fed hike cycle.’
Other aspects for consideration when it came to possible US Dollar weakness consisted of: the US Dollar strength outweighing the rate of inflation—the US inflation rate remains below the Fed’s target; and general US Dollar overvaluation.
However, one factor that could bolster the US Dollar to British Pound (USD/GBP), US Dollar to Canadian Dollar (USD/CAD) and US Dollar to Euro (USD/EUR) exchange rates is the possibility of a Grexit.
Greece has been attempting to renegotiate its finance package with creditors but little progress is being made. Thursday saw financial heads tell Greece it needed to deliver its reforms quickly.
One official stated ‘The message to Greece was simple – “give us a list fast, then you can get the money fast.”’
Athens is in dangerous territory financially and has resorted to using its disaster reserves to pay International Monetary Fund (IMF) payments.
The talks have been progressing so slowly, some officials have suggested that Greece could end up leaving the Eurozone by accident, a prospect referred to as a ‘Grexident’.
The Presidents of the European Council stated: ‘We fully adhere to the agreement of the Eurogroup of 20th February 2015. In the spirit of mutual trust, we are all committed to speed up the work and conclude it as fast as possible.’
Canadian Inflation (CPI) Forecast to Impact CAD/USD, CAD/EUR, CAD/GBP Exchange Rates
The Canadian Dollar is forecast to fluctuate against the Pound sterling (CAD/GBP), US Dollar (CAD/USD) and Euro (CAD/EUR) on Friday with the release of Canadian Consumer Price Index (CPI) figures.
The Bank of Canada (BOC) is scheduled to reveal inflation levels in later trading and is likely to cause major market ripples. Additionally, WTI Crude Oil sank by -0.30% on Friday which could weigh on the ‘Loonie’ exchange rate.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
The Pound is likely to remain softer in Friday’s European session after Bank of England (BoE) Chief Economist Andrew Haldane commented that the central bank could cut rates.
Haldane stated: ‘I think the chances of a rate rise or cut are broadly evenly balanced. In other words, my view would be that policy may need to move off either foot in the immediate period ahead, depending on which way risks break.’
Monday will begin next week with UK CBI Trends Total Orders and Trends Selling Prices, reports which could impact the Pound Sterling exchange rate. US Existing Home Sales and Eurozone Consumer Confidence will also be out and could impact trading.
Furthermore, any speculation regarding UK or US interest rate hikes could put a cat amongst the pigeons as investors attempt to price in higher borrowing costs.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trading at 1.8704. The Pound Sterling to US Dollar (GBP/USD) exchange rate is reaching 1.4740. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3794.