GBP/EUR Falls to 1.37 but ‘Cable’ Remains Bullish
With the Eurozone’s Consumer Price Index moving from negative territory to 0.0% on the year in April, the Pound Sterling to Euro (GBP/EUR) exchange rate remained trading in a softer position.
The pairing had previously fallen below 1.38 as Germany’s stronger-than-anticipated EU harmonised Consumer Price Index upped the odds of the currency bloc’s measure showing improvement.
However, Euro gains were a little tempered by the fact that the Eurozone’s unemployment rate held at 11.3% in March instead of declining to 11.2% as projected.
The Pound was also deriving some support from the fact that the GfK measure of Consumer Confidence showed that sentiment in the UK remained at a 12-year high.
The GBP/USD exchange rate, meanwhile, remained trending above the 1.54 level following the Federal Open Market Committee policy statement.
Although the Fed dismissed the recent US slowdown as being largely the result of temporary factors, the statement had dovish overtones and failed to lift the ‘Greenback’.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3787
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5459
Pound Softer Against Euro, Gains on US Dollar
The Pound Sterling to Euro (GBP/EUR) exchange rate consolidated earlier losses as Germany’s latest inflation data printed in line with forecasts. CPI came in at 0.4% on the year in April, up from 0.3% in March. Consumer prices fell -0.1% on the month, as expected.
Meanwhile, the GBP/USD exchange rate pushed beyond the 1.54 level as US growth data fell well short of the mark. Annualised first quarter GDP printed at 0.2% rather than the 1.0% expected. This was down from the figure of 1.0% recorded in the fourth quarter of 2014.
US Personal Consumption, however, did advance by 1.9% in the first quarter rather than the 1.7% predicted. With the FOMC announcement still to come, additional GBP/USD volatility is likely.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3919
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5409
GBP/EUR Exchange Rate Pares Gains After Confidence Gauges
As the European session progressed, the Pound edged lower against the Euro.
Although the Eurozone published a mixed bag of sentiment indexes (with economic and industrial confidence falling but services confidence improving) the common currency was able to advance on its British peer following the release of the Confederation of British Industry’s Reported Sales data.
The measure had been expected to climb from +18 to +25, but it actually dropped to +12.
Further GBP/EUR movement can be expected to follow the release of the German Consumer Price Index.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3961
The Pound Sterling to Euro (GBP/EUR) exchange rate recouped losses posted following the publication of below-forecast UK growth data and returned to trending around 1.40 on Wednesday while the Pound Sterling to US Dollar (GBP/USD) exchange rate crept closer to 1.54.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast – German Inflation Data to Trigger Euro Movement
On Tuesday the Pound Sterling to Euro (GBP/EUR) exchange rate initially registered declines as investors responded to surprisingly weak first quarter growth in the UK.
The 0.3% figure was lower than the projected expansion of 0.5% and the worst growth reading since 2012.
However, the Pound didn’t stay down for long and the GBP/EUR exchange rate rapidly returned to trending around the 1.40 level.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.4008
While some investors deemed the UK’s growth data as ‘backward looking’, others speculated that the Sterling declines inspired by domestic election concerns were overdone, and the Pound accordingly shook off earlier losses.
Although the Euro derived some support from the news that the Greek bailout negotiation team had been restructured, concerns that the nation may still fail to present a new list of reforms by Friday prevented the common currency from advancing on its British peer during the European session.
On Wednesday the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in a narrow range ahead of the release of Germany’s preliminary Consumer Price Index for April.
As the report is expected to show that inflation accelerated modestly last month, the Euro could advance in the hours ahead.
Sterling, meanwhile, strengthened against several of its peers as the Nationwide House Price report showed monthly price growth of 1% in April, smashing the 0.2% forecast.
On an annual basis house prices were shown to be up 5.2%.
Nationwide economist Robert Gardner said of the result; ‘The pick-up in price growth has occurred even though the pace of activity in the housing market has remained fairly subdued in recent months’.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – US Consumer Confidence Flop Drives ‘Cable’ Higher
The Pound’s uptrend against the US Dollar continued on Tuesday as a below-forecast US Consumer Confidence report weighed heavily on demand for the ‘Greenback’.
Rather than showing the improvement expected, the US Consumer Confidence gauge eased to 95.2.
The data, coming after the week’s disappointing US Services/Composite PMI’s, makes the prospect of a summer interest rate adjustment from the Federal Reserve even more unlikely.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a high of 1.5394
However, not all industry experts viewed the result in a negative light.
In the opinion of one strategist; ‘This is probably noise more than signal because if you look at Michigan and the other indicators, they suggest things aren’t as buoyant as they were last year but not as badly off as this number suggests. It’s hard to think that at this point in the economic cycle that confidence is declining rather than rising.’
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: ‘Cable’ Could hit New Highs if FOMC Adopts Dovish Tone
While the US first quarter growth and personal consumption figures are likely to have an impact on GBP/USD trading, investors may hold back until after the Federal Open Market Committee (FOMC) delivers its policy statement.
Dovish remarks from the Fed and hints that interest rates may remain on hold until or beyond the end of the year may see ‘Cable’ surge to new highs before the close of trading.
GBP/EUR and GBP/USD exchange rate movement could also occur as a result of the UK’s GfK Consumer Confidence Survey, which is expected to hold at 4 in April.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7148, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5390, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6497, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3987