The Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates are all likely to experience major market movement on Friday with several influential events scheduled to take place, including the US Change in Non-Farm Payrolls stat, Greek negotiations and the Bank of England (BoE) inflation report release.
Euro (EUR) Exchange Rate Forecast for Fluctuations as Greece holds off on IMF Payment
The Euro has remained remarkably buoyant this week despite Greece careering towards its deadline to pay the International Monetary Fund (IMF) while being forecast to run out of money within the next week or so.
However, Friday saw Greece defer make its payment to the IMF – rather than defaulting – and investors are hopeful that a deal between Greece and its creditors will be struck.
Greek economy minister George Stathakis commented: ‘We have a mandate from the Greek people to go on, to try to change the terms of the agreement. Greece has to remain in the Euro, otherwise we do not have any mandate to take action.’
‘We are looking forward to getting a deal as soon as possible. The Greek government cannot accept these new proposals put on the table.’
Prime Minister Alexis Tsipras is due to make a speech soon which could impact Euro (EUR) trading significantly.
US Dollar (USD) Exchange Rate Awaiting US Change in Non-Farm Payrolls and Unemployment Rate Data
Meanwhile, the US Dollar (USD) is awaiting the highly influential US Change in Non-Farm Payrolls and US Unemployment Rate stat out later in Friday’s trading. A favourable payrolls figure will likely see the US Dollar (USD) rally as investors’ price in a Federal Reserve rate hike. The Fed has stated on numerous occasions that a strong labour market would spur interest rate hikes.
However, the IMF has called for the Fed to wait until 2016 before hiking interest rates after negative shocks weighed on the US economy.
As both the Bank of England and the Federal Reserve prepare to increase borrowing costs for the first time in years (ten for the Fed, eight for the BoE), the IMF has warned that the US increase of rates could cause ‘significant and abrupt rebalancing of international portfolios with market volatility and financial stability. In either case, asset price volatility could last more than just a few days and have larger-than-anticipated negative effects on financial conditions, growth, labour markets, and inflation outcomes. Spillovers to economies with close trade and financial linkages could be sustained.’
Canadian Dollar (CAD) Exchange Rate Sensitive to OPEC Meeting Outcome and Canadian Employment Data
The Canadian Dollar will experience movement on account of its own labour market stats on Friday, which could make a rather interesting day for the CAD/USD exchange rate in particular.
The Canadian Net Change in Employment stat is forecast to come in at 10.0K in May, while the Canadian Unemployment Rate is predicted to remain at 6.8%.
Another factor that could have a significant effect on the Canadian Dollar on Friday is the Vienna Organisation of Petroleum Exporting Countries (OPEC) meeting, which will discuss levels of oil production.
Oil has been trending lower ahead of the meeting as investors anticipate whether an increase in output will occur.
Industry expert Tim Evans stated: ‘Friday’s OPEC summit in Vienna has shifted attention away from the latest swing in the US Dollar or the decline is US crude-oil inventories and back onto the larger, global supply-demand balance.’
Pound Sterling (GBP) Exchange Rate Forecast (GBP/EUR, GBP/USD, GBP/CAD)
The Pound Sterling (GBP) exchange rate remained softer after the Bank of England (BoE) released its latest 12-month inflation forecast. The rather dovish inflation outlook is likely to weigh on the Pound (GBP) throughout the rest of Friday’s trading.
The Inflation Attitudes Survey read: ‘Asked to give the current rate of inflation, respondents have a median answer of 2.2%, compared with 2.8% in November.’
The report continued: ‘Asked what would be “best for the economy” – higher interest rates, lower rates or no change – 19% thought rates should “go up”, up from 16% in November, 13% of respondents thought that interest rates should “go down”, compared with 12% in November. 42% thought interest rates should “stay where they are”, compared to 40% in November.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending in the region of 1.9178. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending at 1.5306. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the vicinity of 1.3595.
