GBP/EUR Exchange Rate Dips as UK Election Dawns
The Pound Sterling to Euro (GBP/EUR) exchange rate softened, as expected, as the 2015 UK general election finally arrived.
Slightly sub-par German factory orders data and construction PMI failed to have much of an impact on GBP/EUR trading on Thursday as speculation surrounding the outcome of the most hotly-contested election of recent years continued to drive demand for the Pound.
As the votes come in we can expect further GBP/EUR exchange rate movement.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3378.
GBP/USD Supported by Disappointing US Labour Data
Although the Pound Sterling to Euro (GBP/EUR) exchange rate fell back below 1.35 as the European session progressed, the Pound Sterling to US Dollar (GBP/USD) exchange rate was able to consolidate gains as US data fell short of forecasts.
The ADP Employment Change report had been expected to show the addition of 200,000 positions in April, but actually came in at 169,000. March’s figure was also negatively revised to 175,000.
As the data could be viewed as an indication that Friday’s Non-Farm Payrolls figures will come in below estimate, the US Dollar softened against a number of its peers following its publication.
However, any Sterling gains are likely to be limited with the UK general election throwing dark clouds over the currency’s outlook.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3484 while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5215
GBP/EUR, GBP/USD Exchange Rate Forecast – UK Services PMI Rises, but Pound Puts on Mixed Performance
Just prior to the publication of the UK’s Services PMI, the Pound consolidated declines against the Euro as the final Services and Composite PMIs for Italy, France and the Eurozone as a whole were positively revised.
Although the German data underwent negative adjustments, the fact that France performed well lent the Euro support.
The GBP/EUR exchange rate touched a low of 1.3475.
However, although the UK’s Services PMI printed at 59.5 in April, an 8-month high and a considerably better result than the 58.5 forecast, the Pound failed to stage an impressive rebound following the data’s publication.
The Services report highlighted concerns regarding the unbalanced nature of the UK’s economic recovery.
As stated by Markit economist Chris Williamson; ‘there are warning lights flashing about the sustainability of growth, and any new government is faced with the challenge of boosting business confidence and reviving investment in particular. Rather than rebalancing towards manufacturing, economic growth has become increasingly reliant on the service sector, and the consumer is having to drive growth as investment spending remains disappointingly weak amid heightened political uncertainty.’
Meanwhile, the Eurozone’s retail sales report showed a -0.8% month-on-month decline in March, a greater drop than the -0.7% anticipated. The Euro’s losses were minimal following the data publication.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3497 while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending around 1.5186
A sub-par UK Construction report pushed the Pound Sterling to Euro (GBP/EUR) exchange rate back below 1.36 yesterday, but the Pound Sterling to US Dollar (GBP/USD) exchange rate managed to firm to 1.52 as the US trade deficit widened.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News – GBP Back to the border of 1.35 after Greece Makes Payment
Before the release of the UK’s Markit Construction PMI on Tuesday the Pound Sterling to Euro (GBP/EUR) exchange rate briefly advanced above 1.36 as Monday’s soft manufacturing report for France and Greek bailout negotiation concerns limited demand for the common currency.
However, the UK’s below-forecast construction data piled pressure on a currency already weighted down by election uncertainty and the Pound failed to hold its modest gains.
Ahead of the publication of some influential ecostats for the UK and Eurozone, the GBP/EUR exchange rate was trading in the region of 1.3503, down 0.4% on the day’s opening levels.
Sterling’s latest dip against the Euro was largely due to the news that Greece managed to make its 200 million Euro repayment to the International Monetary Fund (IMF) in spite of concerns that the nation is rapidly running out of funds.
This sign of commitment to its debt obligations from the Hellenic nation helped ease ‘Grexit’ concerns – for the time being at least.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News – USD Falls as Fed Interest Rate Bets Pushed Back by Trade Balance Data
Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate’s performance was slightly more impressive.
Although the UK’s construction report did inspire initial GBP/USD losses, a mixed bag of data from the world’s largest economy helped the Pound rebound before the close of trade.
While the influential US ISM-Non Manufacturing Composite Index printed above projected levels, coming in at 57.8 rather than the 56.2 anticipated, the US trade deficit swelled by considerably more than expected in March.
The deficit had been expected to widen from a negatively revised 35.9 billion Dollars in February to 41.7 billion Dollars in March, but it actually increased to 51.4 billion – the worst deficit recorded since the start of the financial crisis in 2008.
The trade data led some investors to bet that the first quarter growth estimate for the US will be negatively adjusted; a result which could deter the Federal Reserve from increasing interest rates.
As stated by economist Paul Ashworth; ‘The March trade data will require a downward revision to first-quarter GDP. The second estimate will show a decline rather than a 0.2% annualised increase, but it will be a pretty modest contraction of roughly 0.3%.’
UK General Election Speculation, UK Services PMI, Eurozone Retail Sales to Impact GBP/EUR, GBP/USD Exchange Rate Forecasts
In the hours ahead a number of reports could have an impact on the performance of the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates.
The UK news to be aware of is Markit’s Services/Composite PMI’s. Both indexes are forecast to show a decline, and as the services sector accounts for around 70% of total UK growth, a poor performance in this area could drive the Pound lower.
The GBP/EUR exchange rate will also be responding to the Eurozone’s retail sales report for March.
Sales are expected to have fallen by -0.7% on a month-on-month basis, resulting in an annual figure of 2.4%. A steeper drop would be Euro-negative, but a surprising increase could lend the common currency support.
Over in the US, the ADP Employment Change data will be responsible for much of the US Dollar’s movement.
The ADP figure is usually considered to provide a good indication of how Friday’s more-influential US Non-Farm Payrolls stat would print.
Should the number of positions increase as expected, the GBP/USD currency pairing could drift lower before the close of trading.
As today is the last day of campaigning for UK political parties, any notable developments this close to the vote could trigger Sterling volatility.
At the moment polls are putting Labour and the Conservatives neck and neck but if one of the major parties looks like it’s becoming a frontrunner, we can expect currency market movement.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – UK Election Results Almost Upon Us
While economic reports for the UK, Eurozone and US will impact the performance of the Pound, Euro and US Dollar to a certain extent, the hotly-contested UK general election is the news of the week.
After votes are cast tomorrow the political landscape of the UK could undergo a dramatic shift, and the Pound is likely to bear the brunt of this.
An outright Conservative victory is likely to bolster the Pound, but a Labour win or a hung parliament (which is looking like the more likely scenario) would probably drag Sterling lower across the board before the weekend.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3494, the Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7409, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5186 and the US Dollar to Pound Sterling exchange rate was trading in the region of 0.6586