Pound Sterling Trending Higher against Euro (GBP/EUR), US Dollar (GBP/USD) Today
With markets calming after the upheaval of Black Monday, the Pound was able to recoup losses against the Euro and advance on the US Dollar.
Even with UK data in short supply and ecostats for Germany impressing, the GBP/EUR currency pair was able to move away from a 3 1/2 month low while the GBP/USD exchange rate was trending in the region of a two-month high.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3704
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5808
After achieving 1.42 in response to last week’s UK inflation data, the Pound Sterling to Euro exchange rate plummeted to 1.34 during the ‘Black Monday’ market turmoil; the Pound Sterling to US Dollar exchange rate, meanwhile, briefly breached 1.58.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: Euro Rallies Today after ‘Black Monday’ Stock Market Crash
The Pound Sterling to Euro (GBP/EUR) exchange rate plunged during the European session as a global stock market crash, excessive enough to earn the pessimistic nickname ‘Black Monday’, caused investors to unwind carry trades and drive the Euro higher across the board.
Concerns relating to the pronounced slowdown in the world’s second largest economy led to China’s leading stock market index falling by 8.5% and European and US stocks tumbled swiftly after.
The FTSE 100 index lost a further 4.2% while the Dow Jones Index lost 1000 points as the market opened.
Is another Global Financial Crisis on the Horizon? NZD, AUD, ZAR Conversion Rates Decline Spectacularly
The latest developments saw currencies like the New Zealand Dollar, Australian Dollar and South African Rand to weaken by as much as 4%, but there were currencies which benefited from the stock market upheaval.
The Euro, for instance, was left trending higher across the board and managed to push the Pound to a three-month low.
Such extensive stock market movement was last seen at the onset of the global financial crisis, leading some industry experts to voice concerns that another might be looming.
Economist Ian Campbell said of the situation; ‘The world now looks saturated with Chinese exports, there is over-capacity in export industry and bubbles have formed in Chinese assets. The authorities’ willingness to prevent the Chinese stock bubble from popping by empowering a state agency to pour money into the market also looks a mistake. Further Chinese devaluations are seen as a big threat. If China makes itself cheaper, other economies’ exports may suffer. Comparisons are being made with 1994, when China devalued shortly before crisis swept across Asia. The emerging carnage looks like continuing for some time, until growth revives. But investors in developed economies cannot afford to look on smugly. Here too markets are distorted and vulnerable.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: Will Federal Reserve Rate Hike Bets be Pushed Back to Next Year on Chinese Concerns?
While the Pound Sterling to Euro (GBP/EUR) exchange rate fell dramatically as a result of the stock market crash, the Pound Sterling to US Dollar (GBP/USD) exchange rate fared much better as some investors bet that the Chinese slowdown would prevent the Federal Reserve from adjusting borrowing costs in 2015.
Whilst others remain convinced a December alteration is still on the cards, the belief that a September hike is now off the table received partial validation from Federal Reserve Bank of Atlanta President Dennis Lockhart, who asserted that Chinese news has complicated the outlook for interest rates.
Lockhart observed; ‘I expect the normalization of monetary policy – that is, interest rates – to begin sometime this year. Currently, developments such as the appreciation of the Dollar, the devaluation of the Chinese currency, and the further decline of oil prices are complicating factors in predicting the pace of growth.’
The GBP/USD exchange rate fell from a high of 1.5802 after Lockhart’s comments but remained trending above 1.5750.
GBP/EUR, GBP/USD Exchange Rate Forecast: Further Stock Shifts Could Impact Pound, Euro, US Dollar – German Growth Data Ahead
Although some stabilisation in European and US stock markets was seen before the close of the local session, further extensive volatility cannot be ruled out and for that reason additional Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rate shifts could occur.
Tomorrow the GBP/EUR exchange rate may also see fluctuations as a result of Germany’s second quarter growth data and the nation’s IFO Business Climate, Current Assessment and Expectations surveys.
Investors with an interest in the Pound Sterling to US Dollar (GBP/USD) exchange rate will also be focusing on the US Markit Services and Composite PMIs, the nation’s Consumer Confidence index and New Home Sales data.
Positive US data could support Fed rate hike expectations and see the US Dollar gain.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3574 while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5762.