The Pound Sterling (GBP) has risen by 0.3% against the Euro (GBP/EUR) today, a testament to the continuing power of the Glencore news from yesterday.
Waning Relevance of Monday’s News may be Crushed by Poor UK Balance Figures
The Pound Sterling (GBP) has held onto its lead against the Euro (GBP/EUR) today in spite of the Eurozone Q2 GDP rising against predictions from 1.2% to 1.5%. This winning streak for Sterling could run out of steam tomorrow, however, as three key UK Trade Balance Figures are due in, all of which have been pessimistically predicted to show a widening in the current UK trade deficit.
The Pound Sterling (GBP) has gained by 0.5% against the Euro (GBP/EUR) today and by 0.6% against the US Dollar (GBP/USD) on a day of no economic updates for the UK.
No Major Sterling News Until Wednesday; Eurozone GDP may Upset Current GBP/EUR Advantage Before Then
The Pound Sterling (GBP) may lose its current lead on the Euro (GBP/EUR) tomorrow after the Eurozone annual Q2 GDP result comes in. Forecasts have been for a stagnation at 1.2%, therefore any number significantly higher or lower than this figure could induce a major swing in the GBP/EUR pairing. On Wednesday, however, the UK Trade Balance results for July and GDP Estimate for August are released, so Sterling may make up for any lost ground then.
The Pound Sterling (GBP) has an important week ahead of it in terms of economic announcements, beginning on Wednesday.
GBP/EUR, GBP/USD Exchange Rate News: Reverse Trends in Both Pairings Last Week for Sterling
Last week, the Pound Sterling (GBP) showed virtually opposite trends against the Euro (GBP/EUR) and the US Dollar (GBP/USD); while the Pound started the week at a high of 1.3801 against the Euro (EUR), it dived on Tuesday to the weekly low of 1.3523 after the UK Net Consumer Credit results for July and the Manufacturing PMI for August both failed to meet with forecasts. Despite this setback, Sterling ended the week on an improved rate of 1.0371 against the Euro; this was lower than the starting high due to a scarcity of economic data for Sterling on Friday.
Against the US Dollar (USD), the Pound fared considerably worse, sliding down from a high on Monday of 1.5433 to a low on Friday of 1.5219. This was primarily due to a number of highly ‘Buck’-supportive data releases which inspired renewed confidence in the possibility of a Fed interest rate hike. While most results fell short of expectations, they still remained positive, which demonstrated growth in their respective sectors, albeit at a slowed down pace.
The US Non-Manufacturing Composite was one such example: predictions had been for a drop from 60.3 points to 58.2, but the reality saw a decline to only 59 points instead.
Euro Came Out Strong against Sterling despite Detrimental Events, US Dollar Gained from Beige Book
The Euro (EUR) to Pound Sterling (EUR/GBP) exchange rate fared fairly well last week, against what might be considered unfavourable circumstances. The worst of these was on Thursday after European Central Bank President Mario Draghi announced the ECB’s policies for the coming year. Although the interest rate freeze at 0.05% was entirely expected, speculators rankled when it was implied that the ECB’s program of quantitative easing could extend past September 2016. The impact of the statement was immediate, seeing the Euro dive from 0.7354 against the Pound to 0.7279. Despite poor PMI results on Friday morning, the Euro still managed to take the lead against the Pound (GBP) early on.
The US Dollar (USD) has steadily climbed up against the Pound (USD/GBP) on account of an overall optimism for a Fed rate hike occurring in September; this was exemplified in the Fed’s ‘Beige Book’, which forecast increased wages for employees owing to lower unemployment rates.
GBP/EUR, USD Exchange Rate Forecast: All to Play for in Key Data Week for all Three Currencies
The biggest impactor on the Pound Sterling (GBP) this week will be the Bank of England (BoE) Asset Purchase Target for September, along with the BoE’s Inflation Target for the next 12 months. No predictions have been made, but a lowering of both figures could trigger a brief Sterling rally after the actual numbers are announced.
The Eurozone Q2 GDP will decide the Euro’s (EUR) faring; stagnation is predicted so any deviations may trigger major movement for the common currency.
The ‘Buck’ (USD) will be most affected by the University of Michigan Confidence score, and predictions have been marginally optimistic for an increase from 91.9 to 92 points.
Current GBP, EUR, USD Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3675, the Euro to Pound Sterling (EUR/USD) exchange rate was trending in the region of 0.7314, the Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1141, the US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8979, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5234 and the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.6565 during Friday’s European session.