Pound Sterling Exchange Rate Forecast – Pound Broadly Softer as Manufacturing Declines
During the European session the Pound declined against both the Euro and US Dollar following the publication of a disappointing manufacturing report for the UK.
The Markit Manufacturing PMI softened from a negatively revised 54.0 to 51.9, defying expectations for an increase to 54.6.
The news put Sterling under pressure, but the currency’s 0.7% drop against the Euro was also a result of Greece presenting its creditors with a list of reform proposals.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3584
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5295
GBP/EUR, GBP/USD Exchange Rate Forecast: Pound Trends Lower before Manufacturing PMI
Before the close of trading the Pound lost 1.2% against the Euro and 0.5% against the US Dollar as the latter currencies were supported by domestic data.
While the Euro was boosted across the board as the pace of inflation in the Eurozone was shown to have accelerated, demand for the US Dollar increased thanks to better-than-forecast initial jobless and continuing claims data.
As US data has tended to come in below estimated levels recently, the above-forecast figures were well received and gave the ‘Greenback’ a boost.
On Friday both the GBP/EUR and GBP/USD exchange rates could experience volatility following the publication of the UK’s Manufacturing PMI for April. An improved figure would be Pound-supportive.
The GBP/USD currency pair may also come under pressure as a result of the US ISM Manufacturing gauge, which is believed to have risen from 51.5 to 52.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3707
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5338
On Thursday the Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.38 as investors responded to mixed Eurozone data, but the Pound Sterling to US Dollar (GBP/USD) exchange rate remained bullish at 1.54 after the Federal Open Market Committee (FOMC) policy announcement.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast – Eurozone Inflation Improves, Unemployment Remains High
After achieving highs beyond 1.40 earlier in the week, the Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.3761 as a result of an improved inflationary climate in the Eurozone.
The GBP/EUR exchange rate softened on Wednesday as Germany’s Consumer Price Index showed improvement, upping the odds of the gauge for the Eurozone as a whole also rising in April.
Declines in the GBP/EUR pair were also the result of the UK’s below-forecast Reported Sales data from the Confederation of British Industry (CBI), and Sterling held losses despite the GfK Consumer Confidence Index printing at 4 – matching both estimates and the 12-year high recorded the previous month.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.3909
The sentiment data was encouraging given the uncertainty being created by the upcoming UK general election, and industry expert Nick Moon commented; ‘The government goes into the election with the final Consumer Confidence Barometer offering mixed fortunes. On the one hand, there is no continuing momentum – the index has not risen since last month – while on the other hand the index is standing at a far higher point than when the government came to power.’
During Thursday’s European session the Eurozone’s CPI was shown to have risen from -0.1% to 0.0% – a good sign that the European Central Bank’s (ECB) quantitative easing measures are having the desired effect.
However, the Euro’s uptrend was limited due to a disappointing monthly retail sales number and unemployment change figure for Germany.
The Eurozone’s unemployment report also failed to show the decline in joblessness expected, printing at 11.3% rather than 11.2%.
In the view of economist Jonathan Loynes; ‘The latest Eurozone inflation and labour market data paint a mixed picture, with deflation ending – for now at least – but unemployment stuck at a very high level. The general picture remains one of very weak underlying price pressures in the Eurozone, reflecting both the weakness of pipeline cost pressures and the spare capacity left in the economy.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – FOMC Statement, US GDP Data Bolster ‘Cable’
The Pound may have been struggling against the Euro on Thursday, but the British currency was riding high against the US Dollar in the wake of the FOMC policy announcement.
The GBP/USD exchange rate surged above 1.54 on Wednesday as US first quarter growth data fell well short of the mark and ‘Cable’ consolidated these gains after the FOMC refrained from providing any guidance as to the probable timing of interest rate revisions.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a high of 1.5492
The Fed did stress that much of the weakness currently present in the US economy is due to temporary factors (such as poor weather) but the run of lacklustre US figures continues to weigh heavily on the ‘Greenback’.
Markit economist Chris Williamson noted; ‘A stalling of US economic growth at the start of this year rules out any imminent hiking of interest rates by the Fed.’
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: US Personal Consumption, Initial Jobless Claims Ahead
While the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to continue trending around present levels until tomorrow and the publication of the UK’s Markit Manufacturing PMI, the Pound Sterling to US Dollar (GBP/USD) exchange rate could extend gains before the close of the local session.
If today’s US Personal Consumption Expenditure and Initial Jobless/Continuing Jobless figures print below expected levels, it will further up the odds of a rate hike being delayed and may see ‘Cable’ achieve fresh highs.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7242, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5452, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6473, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3804