GBP/EUR, GBP/USD Exchange Rates Tumble on Revised BoE Rate Expectations
Yesterday’s disappointing trio of Bank of England (BoE) announcements left the Pound trending in a softer position against the majority of its currency counterparts.
With industry experts now envisaging that no adjustments will be made to borrowing costs until the first quarter of next year, both the GBP/EUR and GBP/USD currency pairs tumbled.
If today’s UK trade data shows a widening of the nation’s deficit, the Pound could be in line to post further losses in the hours ahead.
BoE Vote Split 8-1 But Inflation Forecasts Cut, Pound Sterling (GBP) Broadly Softens Today
The Pound registered fairly notable declines across the board today as the Bank of England was less hawkish than economists had hoped during ‘Super Thursday’.
Although the Monetary Policy Committee (MPC) was split on whether or not to increase interest rates immediately, there was just one lone dissenter and not the 6-3 divide hoped for.
The BoE also opted to negatively revise its inflation outlook in view of falling commodity prices and a stronger Pound. All this conspired to push back rate hike expectations and undermine demand for Sterling.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4257
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5523
We could see both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates advance to their highest levels of 2015 so far if Super Thursday lives up to the hype.
Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: UK Services PMI Fails to Weaken Pound Demand
The Pound managed to continue trending close to its best rate for seven years against the Euro on Wednesday and held above the 1.56 level against the US Dollar in spite of the UK’s Services PMI revealing a slowing in output in the UK’s dominant sector.
The index printed at 57.4 in July, down from 58.5 in June and lower than the expected reading of 58.0.
While this sign of decelerating growth might give the Bank of England (BoE) cause to reconsider bringing forward its first increase of UK interest rates for years, hopes for a hawkish ‘Super Thursday’ prevented the Pound from declining as a result of the release.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.4337
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast – Pound May Jump to Best Level of 2015 Despite Positive Eurozone Retail PMI
The Euro to Pound Sterling (EUR/GBP) exchange rate softened on Wednesday amid concerns that Greece won’t be able to get back on its feet without a substantial reduction to its current debt pile.
A worse-than-anticipated fall in Eurozone consumer spending also weighed on the Euro.
However, the common currency was able to claw back some of its losses after the Eurozone’s Retail PMI printed at 54.2 in July, up from 50.4 in June. The French retail measure also returned to growth territory.
Additionally, German Factory Orders were shown to have risen by 2.0% in June month-on-month, smashing the projected gain of 0.3%.
As the European session progresses the EUR/GBP exchange rate could fall to a fresh multi-year low if the BoE hint that rate hikes are coming.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a low of 0.6971
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Forecast – ‘Cable’ Could Hit 2015 Highs before US Employment Data
Although the UK’s Services PMI fell short of forecasts on Wednesday, the Pound Sterling to US Dollar (GBP/USD) exchange rate consolidated its position above the 1.56 level following the publication of some mixed reports from the US.
The ISM Non-Manufacturing gauge smashed expectations by surging from 56.0 in June to 60.3 in July. A much smaller gain to 56.2 had been anticipated.
However, the positive impact of this impressive performance in the US services sector was counteracted by a widening in the US trade deficit and a lower-than-predicted ADP Employment Change report.
While the BoE announcements are likely to be the main cause of ‘Cable’ movement today, the pairing may well experience additional volatility before the weekend as the US Non-Farm Payrolls report is published.
If the US is shown to have added fewer positions than expected, or if average earnings fell, the Pound could extend any gains recorded today.
The Pound Sterling to US Dollar (GBP/USD) exchange rate achieved a high of 1.5637
GBP/EUR, GBP/USD Exchange Rate Forecast: BoE Interest Rate Announcement, Minutes and Inflation Report May Drive Pound to New Highs
Today could prove to be decisive for the Pound, with both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates having the potential to advance to fresh highs in response to a trio of influential BoE releases.
While the BoE policy meeting is expected to reveal no alterations to fiscal policy at this juncture, the central bank is releasing its minutes simultaneously for the first time.
Now that the immediate threat of a ‘Grexit’ has passed, investors believe that as many as three members of the Monetary Policy Committee (MPC) could vote for higher borrowing costs.
A split vote would indicate that interest rates are likely to be revised either before the end of 2015 or at the beginning of next year – and speculation to this effect would have a positive impact on the Pound.
The BoE’s inflation report will be of equal interest, particularly given the fact that economists are envisaging a positive revision to UK growth forecasts. However, if inflation projections are negatively adjusted it could take a toll on Sterling’s uptrend.
All-in-all, a hawkish BoE could be enough to drive the Pound Sterling exchange rate to fresh highs against the Euro, Australian Dollar, New Zealand Dollar and Canadian Dollar as well as lending support to ‘Cable’ ahead of tomorrow’s US Non-Farm Payrolls report.
Current GBP, EUR, USD Exchange Rates
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.6979, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5608, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6406, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4326