Newsflash – GBP/USD Rallies after as US Factory Orders Flop
As the European session continued, the Pound Sterling to US Dollar (GBP/USD) exchange rate extended gains, with the pairing achieving a high of 1.5344.
The ‘Greenback’ broadly softened in response to a sharper-than-forecast slide in US Factory Orders and consolidated losses as a Fed official asserted that the US economic slowdown could last for longer than previously anticipated.
Tomorrow’s US ISM Non-Manufacturing data and ADP Employment Report could either exacerbate these concerns or help dismiss them.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5330
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3770
Today the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.37 amid rising hopes that Greece will make a deal with its creditors; meanwhile the Pound Sterling to US Dollar (GBP/USD) exchange rate climbed 0.3% following the release of encouraging UK Construction data.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: Pound Declines at the Beginning of the Week as UK Manufacturing Data Flops
Both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates declined on Monday as investors responded to a disappointing UK Manufacturing PMI.
Although the Markit Manufacturing PMI did rise in May, the improvement from 51.8 to 52 wasn’t as impressive as economists predicted and appeared to indicate that the lacklustre growth recorded in the first quarter of the year may have continued in the second.
However, economist James Knightley said of the result; ‘In aggregate [the data] is a little disappointing. But with the UK economy dominated by services, Wednesday’s services PMI is going to be more important in determining the UK’s second quarter growth story.’
While the Euro was supported by encouraging German inflation data, the declines in the Pound Sterling to US Dollar pairing were acerbated by the US ISM Manufacturing Index.
The influential gauge of the US manufacturing sector jumped to 52.8 in May following a reading of 51.5 in April.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast – German Unemployment Holds Steady; ECB, IMF Officials Step up Greek Talks, Inflation Accelerates
The Euro to Pound Sterling (EUR/GBP) exchange rate consolidated and extended Monday’s gains as the week continued and the heads of both the European Central Bank (ECB) and International Monetary Fund (IMF) adopted a more active role in the Greek bailout discussions.
With the ECB’s Mario Draghi and the IMF’s Christine Lagarde driving the situation it is hoped that an accord may actually be reached before Greece is forced to default on its June 5th debt repayment.
The Euro to Pound Sterling (EUR/GBP) exchange rate was little-changed following the release of Germany’s latest employment figures (which showed that the level of joblessness in the nation eased by -6,000 in May) but the common currency did derive support from the Eurozone’s inflation numbers.
To the surprise of economists, the pace of inflation in the Eurozone increased by 0.3% on the year last month, up from stagnation in April and beating forecasts for a 0.2% climb in consumer prices.
The core Consumer Price Index surged from 0.6% to 0.9%, smashing the 0.7% reading expected.
Economist Marco Valli said of the result; ‘The threat of deflation has evaporated. Oil prices are adding upwards pressure on headline inflation and, while the underlying trend remains weak, it’s not consistent with deflation.’
The Euro to Pound Sterling (GBP/EUR) exchange rate was trending in the region of 0.7196
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – ‘Cable’ Recoups Losses before US Factory Orders Data
While the Pound was struggling against the Euro on Tuesday, the British currency was able to claw back some of Monday’s losses against the US Dollar ahead of the release of US Factory Orders data.
Factory Orders in the world’s largest economy are believed to have fallen by -0.1% on the month in April following March’s 2.1% gain.
If that proves to be the case, ‘Cable’ could push higher still during the North American session.
However, a surprise to the upside would bolster demand for the ‘Greenback’ and support Federal Reserve interest rate hike expectations, which may weigh on GBP/USD trading.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a high of 1.5258
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: UK Services PMI, Eurozone Unemployment, ECB Interest Rate Decision and US Jobs Data Ahead
Given the plethora of influential ecostats scheduled for publication tomorrow, both the Pound Sterling to Euro and Pound Sterling to US Dollar (GBP/USD) exchange rates are likely to experience considerable volatility.
The Pound could gain on both the Euro and US Dollar if the UK Services PMI defies expectations for a decline from 59.5 to 59.2 and actually moves further away from the 50 mark separating growth from contraction.
However, any advance against the Euro could be tempered if the unemployment rate in the Eurozone eases from 11.3% to 11.2%, as projected.
Hawkish commentary from the ECB on the subject of quantitative easing and the Eurozone’s economic recovery would also be Euro-supportive.
In terms of US data, the reports with the most potential to impact GBP/USD trading include the ADP Employment Change number, US Trade Balance figures and the ISM Non-Manufacturing Composite result.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7198, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5251, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6557, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3894