Poor US Data Drives GBP/USD to 1.51
Before the close of the local session on Thursday the Pound Sterling to US Dollar (GBP/USD) exchange rate soared above the 1.51 level as investors responded to yet more disappointing data from the US.
US initial jobless claims were shown to have increased from 294,000 to 295,000 rather than falling to 287,000 as expected while the Markit Manufacturing PMI dipped from 55.7 to 54.2.
There was further bad news for the US as New Home Sales plummeted by -11.4%, a far steeper drop than the -4.5% dip anticipated.
As these figures increase the odds of the Federal Reserve leaving interest rates on hold, demand for the US Dollar fell substantially following their publication.
In the hours ahead further GBP/USD exchange rate movement could occur as the US releases Durable Goods Orders. An unexpectedly bad result would drive the ‘Greenback’ lower before the weekend.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3900.
UK Retail Sales Slide, GBP/EUR and GBP/USD Decline
As the European session progressed, the GBP/EUR exchange rate lost 0.4% while the GBP/USD exchange rate softened by 0.2%.
The Pound declined against a number of its rivals after the UK’s retail sales report showed an unexpected slide in consumer spending in March.
Retail sales had been expected to rise by 0.5% on the month in March, but actually fell by -0.5%.
Economist Alan Clarke said of the result; ‘It may well be that consumers maxed out before Christmas in a discount fuelled frenzy and the post-Christmas period is experiencing a pause for breath. the monthly data all point towards sluggish first-quarter GDP next Tuesday, not the sort of reading that the coalition government will be hoping for.’
The result saw the Pound fall back below 1.40 and helped the US Dollar fight back against its British counterpart. Losses were slightly limited as UK public spending data printed at expected levels.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3966 while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5004
After a day of strong Sterling sentiment, the Pound Sterling to Euro (GBP/EUR) exchange rate managed to advance above the 1.40 level while the Pound Sterling to US Dollar (GBP/USD) exchange rate finally managed to close out the session above the key support level of 1.50.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: BoE Minutes Bolster Pound, Eurozone Confidence Data Disappoints
Surprisingly hawkish minutes from the Bank of England (BoE) helped the Pound advance on a number of its rivals on Wednesday.
Although all nine members of the Monetary Policy Committee (MPC) voted in favour of keeping interest rates on hold, two indicated that they might vote for a rate rise in the near future and others claimed that inflation could accelerate more rapidly than expected.
The BoE is still expected to refrain from adjusting borrowing costs until 2016, but the more hawkish outlook was Pound-positive.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.4047
Ongoing concerns regarding the situation in Greece and a below-forecast Consumer Confidence index for the Eurozone also aided the GBP/EUR uptrend.
The measure of consumer sentiment had been expected to improve from -3.7 to -2.5 in April, but it actually worsened to -4.6.
Economist Howard Archer said of the result; ‘This could be linked to increased concerns over the Greek situation, or it may just be a correction following recent sharp increases.’
The sub-par economic reports for the currency bloc continued on Thursday as Composite, Manufacturing and Services PMIs for the Eurozone and its largest economies printed below forecast levels, with the French manufacturing sector moving further into contraction territory.
Markit economist Chris Williamson said of the result; ‘The weaker rate of expansion is a big disappointment, given widespread expectations that the ECB’s quantitative easing will have boosted the fledgling recovery seen at the start of the year.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: ‘Cable’ Advances beyond 1.50 But Pares Advance before Public Spending Data
Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate also had a bullish Wednesday, with ‘Cable’ hitting (and managing to hold) the 1.50 level.
The US House Price Index and Existing Home Sales figures did improve on projections, but the results weren’t enough to outweigh the positive impact of the BoE minutes and the Pound dominated its North American peer.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a high of 1.5040
However, Sterling lost over 0.3% on Thursday morning as investors looked ahead to today’s UK public spending figures.
Disappointing results may cause the Pound to give up more of its recent gains.
That being said, further GBP/USD exchange rate movement could be inspired by the day’s US reports, including initial jobless/continuing claims figures, the Markit Manufacturing PMI and New Home Sales data.
Any reports which add to the case in favour of the Federal Reserve leaving interest rates on hold for the foreseeable future will be US Dollar-negative.
As it stands, the ecostats are expected to show a decline in initial jobless claims and a slide in new home sales.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: UK Retail Sales in Focus
While the UK public spending figures are likely to have an impact on both the GBP/EUR and GBP/USD exchange rates, investors will also be taking a keen interest in the nation’s retail sales numbers.
Should sales be shown to have increased by more than the 0.5% month-on-month gain predicted in March, Sterling could well achieve new weekly highs against both the Euro and US Dollar in the hours ahead.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7130, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.4984, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6671, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4022