The Pound Sterling to Euro (GBP/EUR) exchange rate was trending lower on Thursday while the Pound Sterling to Canadian Dollar (GBP/CAD) and Pound Sterling to US Dollar (GBP/USD) exchange rates were trading lower.
The UK’s Markit Construction Purchasing Managers Index (PMI) is scheduled for release shortly, followed by the Canadian International Merchandise Trade Balance and US Factory Orders.
UPDATE: The UK Markit Construction PMI fell from 60.1 to 57.8 in March as general election fears caused citizens to get cold feet.
— Shaun Richards (@notayesmansecon) April 2, 2015
However, French finance minister Michel Sapin has suggested that there needs to be better advancements in the Greek negotiations, a factor that threatens to tip the Euro exchange rate over at any moment.
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates declined in the second half of Wednesday’s European session after the ONS stated that final quarter productivity had slipped by 0.2%; while the Pound Sterling to US Dollar (GBP/USD) exchange rate remained in a tight range after US ADP Employment Change data boded badly for Friday’s Change in Non-Farm Payrolls.
The ADP Employment Change figure fell below forecasts for the second consecutive month and recorded the biggest miss in March in the latter four years coming in at 189K (forecasts expected 225K). The figure doesn’t bode well for Friday’s Change in Non-Farm Payrolls and therefore Friday’s ecostat release could be extremely interesting.
Furthermore, the ISM Manufacturing ecostat softened further than predicted from 52.9 to 51.5.
Over in the Eurozone, Greece expects a deal to be struck with finance heads by orthodox Easter meaning less than two weeks from now a lot of the tension could be over. However, rumours have surfaced that Greece may default on its next IMF payment, an event that could pressure the Euro exchange rate significantly lower.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading higher in Tuesday’s European session despite a drop in the German Unemployment Rate, as Grexit fears hindered market sentiment; the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate also gained, while the Pound Sterling to US Dollar (GBP/USD) exchange rate softened.
German Unemployment Sinks but Grexit Fears Pressure Euro (EUR) Exchange Rate Lower
The Euro to Pound Sterling (EUR/GBP) exchange rate would usually have rallied on the seasonally adjusted German Unemployment Rate falling from 6.5% to 6.4%; however, it remained softer as uncertainty regarding Greece’s future continued to weigh on the single currency.
Progress between Greece and its creditors has been severely stunted with tensions between Germany and Greece stealing a lot of the limelight while forging long-term solutions fall by the way side.
Economist Jeremy Cook commented: ‘Last night showed us that the Greek government and the European architects of Greece’s bailout program remain very far apart on what needs to be, and can be done for the former’s economy.’
As a result of uncertainty, the Euro to Pound Sterling (EUR/GBP) exchange rate slipped below 0.73, with further losses forecast if Greece looks likely to leave the Eurozone.
However, another factor adding to the already tense situation is the upcoming meeting between Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin which could see discussions regarding financial aid arise.
— Francine Lacqua (@flacqua) March 31, 2015
Meanwhile, the US Dollar is enjoying further support after last week’s hawkish Federal Reserve comments on interest rate hikes. Although keeping a cautious edge, Fed Chairwoman Janet Yellen suggested that interest rate increases would likely begin this year, albeit in small and very gradual increments.
However, Federal Reserve official Stanley Fischer stated in Monday’s North American session that there needs to be more regulations when it comes to shadow banks.
Fischer stated: ‘It is widely understood that any regulation of non-banks should fit their activities and the vulnerabilities they pose, which implied that not every non-bank financial or activity necessarily needs to be regulated.’
More Federal Reserve officials are expected to speak on Tuesday and any hawkish remarks could keep the US Dollar buoyant against majors like the Pound Sterling (USD/GBP), Euro (USD/EUR) and Canadian Dollar (USD/CAD).
The US Dollar has also been supported by upbeat data this week, particularly the rise to 1.4% in US Personal Consumption Expenditure on Monday.
Furthermore, Tuesday could be another exciting day for the US Dollar to Pound Sterling (USD/GBP) exchange rate with the release of US Consumer Confidence figures later in Monday’s trading. The Chicago Purchasing Managers Index is also scheduled for release.
Canadian Dollar (CAD) Exchaneg Rate Forecast to Sink on Iranian Oil Export Increase
The Canadian Dollar fell on Tuesday as the price of oil continued to fall. WTI crude dropped by -0.84% as it hit $47.86 per barrel on Tuesday. The price of oil continued to soften on the prospect of a deal between Iran and six world powers (US, UK, France, Germany, Russia and China) regarding nuclear power.
In less than 24 hours the deal will meet its deadline ahead of a solid agreement in June; if the six-powers ease the current sanctions on the nation (in exchange for less nuclear bomb power in Iran), the nation could bring more oil into the market and the global glut could become much worse.
ANZ stated: ‘Iran has built up significant oil inventories and could immediately increase exports if sanctions are lifted.’
Oil isn’t the only factor that could severely impact the Canadian Dollar to Pound Sterling (CAD/GBP), US Dollar (CAD/USD) and Euro (CAD/EUR) exchange rates on Tuesday. Canadian Gross Domestic Product figures are out later in the session and are forecast to note a decline from 2.8% to 2.4% on the year in January.
If predictions are true, the ‘Loonie’ could soften below the 0.78 US cents benchmark.
Pound Sterling (GBP) Exchange Rate Forecast: GBP/EUR, GBP/USD, GBP/CAD
The Pound Sterling exchange rate should be offered some degree of support in Tuesday’s trading after UK Gross Domestic Product (GDP) figures printed above forecasts, hitting 3.0% year-on-year in Q4 rather than the 2.6% predicted.
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates were already offered a boost in the earlier part of Monday’s session with the release of an upbeat GfK UK Consumer Confidence reading.
The index jumped to 4 in March from February’s 1; economists had forecast a smaller rise to 2.
Markit’s UK Manufacturing Purchasing Managers Index (PMI) is likely to influence the Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates on Wednesday.
UPDATE: The Pound Sterling to US Dollar (GBP/USD), Pound Sterling to Euro (GBP/EUR) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates all fell in Wednesday’s European session after the Office of National Statistics (ONS) revealed that UK productivity declined in the fourth quarter by 0.2% remaining below pre-crisis levels.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is reaching 1.8674. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4827; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3643.