The Pound Sterling to Euro (GBP/EUR) exchange rate began Tuesday’s trading slightly higher, while the Pound Sterling to US Dollar (GBP/USD) exchange rate fell ahead of highly influential UK inflation data.
The Pound Sterling to Euro (GBP/EUR) exchange rate began Monday’s session trading higher as Greek negotiations continued in Brussels and Athens, while the Pound Sterling to US Dollar (GBP/USD) exchange rate softened considerably.
As the UK general election draws closer, some analysts have suggested that the Pound Sterling exchange rate could suffer from a ‘Lehman moment’ and fall to as low as $1.35 versus the US Dollar (GBP/USD).
With the prospect of a political shakeup dominating the Pound as many suggest a hung parliament could occur, the fallout of a messy election could leave Sterling extremely weak.
Industry expert Kit Juckes commented: ‘I can’t see how the election can provide a positive outcome for Sterling. It’s just a source of uncertainty for international investors. Apart from the fact that it would be an enormous shock if you got an outcome where any single party could form a government, the politics just produces negative sentiment, volatility and a nervousness that has bred the sense that nobody wants to buy [the Pound’.’
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate could experience some exciting fluctuations next week on several key pieces of data, such as UK inflation figures and the European Central Bank (ECB) interest rate decision.
Tuesday’s UK Consumer Price Index (CPI) is likely to be major source of movement for the Pound Sterling to Euro (GBP/EUR) exchange rate, as inflation levels are being carefully watched by those investors hoping for a Bank of England (BoE) interest rate hike in the near future.
However, with weak global inflation as a result of tumbling oil prices, it’s not expected that the BoE will be in a position to increase interest rates in the near future.
Other major UK releases will come in the form of UK Unemployment Rate, Employment Change and Average Weekly Earnings stats on Friday. A healthy labour market could allow for interesting Pound Sterling trading if investors in the Pound think it could push the BoE toward higher borrowing costs.
Meanwhile, in the Eurozone, Industrial Production ecostats will emerge on Tuesday which could offer the Euro to Pound Sterling (EUR/GBP) exchange rate some moderate movement.
Wednesday is likely to be a more influential day by way of domestic data, with the release of the European Central Banks (ECB) interest rate decision. It’s unlikely the ECB will adjust the current 0.05% interest rate in either direction, but the follow-up statement is likely to cause significant movement.
Friday is also expected to be quite a significant day for Euro movement with the G-20 finance ministers and central bankers meeting in Washington. The discussion of the situation in Greece is an event that could cause additional Euro to Pound Sterling (EUR/GBP) exchange rate variations.
Pound Sterling to Australian Dollar (GBP/AUD) Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast
The Australian Dollar to Pound Sterling (AUD/GBP) and Australian Dollar to Euro (AUD/EUR) exchange rates will be in for a day of choppy trading on Thursday, with the release of Australian Employment Change and Unemployment Rate figures. Unemployment levels are forecast to remain at 6.3% in the month of March—a development that could offer the AUD/EUR and AUD/GBP currency pairs some stability.
Westpac’s Consumer Confidence Index will be out in Wednesday’s Australasian session, while the National Australia Bank (NAB) Business Confidence and Business Conditions figures come out on Tuesday.
Additionally, any changes in the price of iron ore over the week ahead could influence the Australian Dollar exchange rate.
Euro to US Dollar (EUR/USD), Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
The US Dollar is forecast to have a couple of majorly influential days next week such as Tuesday’s with the publication of the US Advance Retail Sales ecostat. The March ecostat is predicted to rise by 1.0% after February’s disappointing -0.6% contraction.
Friday will be another showstopper of a day when both the US Consumer Price Index and University of Michigan Confidence ecostats are published. A fall in US inflationary levels or US consumer confidence could pressure the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates lower.
Euro to Canadian Dollar (EUR/CAD), Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
The Canadian Dollar could be in for a wild ride next week if speculation regarding the Bank of Canada’s (BOC) upcoming interest rate decision heats up.
Wednesday will be a busy day for the ‘Loonie’ exchange rate with the release of Canadian Manufacturing Shipments, Canadian Existing Home Sales and the Bank of Canada’s monetary policy report.
The BOC is expected to keep interest rates on hold at 0.75% in its Wednesday announcement, but any dovish tones that hint toward a rate cut in the near future could seriously impact the Canadian Dollar to Euro (CAD/EUR) and Canadian Dollar to Pound Sterling (CAD/GBP) exchange rates.
On Monday, the Euro to Canadian Dollar (EUR/CAD) exchange rate hit a fresh 12-month low.
On Friday, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was reaching 1.9079. The Euro to US Dollar (EUR/USD) exchange rate resided at 1.0608. The Euro to Canadian Dollar (EUR/CAD) exchange rate was trading at 1.3352. The Euro to Pound Sterling (EUR/GBP) exchange rate was trading at 0.7245. The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in the region of 1.8434. The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading at 1.4644; the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3811.