Newsflash: GBP/EUR, GBP/USD Softer after Surprise Dip in UK Sentiment
The Pound consolidated previous losses against both the Euro and US Dollar on Friday as the GfK Consumer Confidence Index fell unexpectedly.
Economists had forecast that the sentiment measure would hold at +4, but it actually fell to +1 in May despite the Conservative Party’s outright win in the general election.
The GBP/EUR downtrend was also due to German retail sales increasing by 1.7% on the month in April, more than the 1.0% gain anticipated.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3946
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5284
Before the weekend the Pound Sterling to Euro (GBP/EUR) exchange rate could return to trending above the 1.40 level while the Pound Sterling to US Dollar (GBP/USD) exchange rate could rise beyond 1.53 if UK Consumer Confidence increases.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: Euro Gains amid Conflicting Greek Comments, Pound Softer on UK Growth Data
The Pound to Euro (GBP/EUR) exchange rate shed around 0.5% on the day’s opening levels on Thursday as investors ditched Sterling in response to disappointing UK growth data.
The pace of UK expansion in the first three months of the year was shown to have come in at 0.3% (quarter-on-quarter) and 2.4% (year-on-year) rather than the 0.4% and 2.5% expected.
This was down from quarterly growth of 0.6% in the fourth quarter of 2014.
Although economists believe the UK recovered from this first quarter slowdown, the report still weighed on the Pound.
GBP/EUR exchange rate declines were also the result of the Greek Prime Minister asserting that Greece is close to reaching a bailout agreement with its creditors.
A number of EU officials may have disputed this claim, and the European Central Bank (ECB) may have issued cautious statements regarding the threat of contagion presented by a ‘Grexit’, but the Euro was able to close out the European session trending in a stronger position.
The US Dollar, meanwhile, maintained a bullish relationship with the majority of its currency counterparts despite US initial jobless and continuing claims figures showing a higher-than-expected number of applicants for US unemployment benefits.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast – UK Confidence Report, German Retail Sales Data to Impact Euro Movement
On Friday the Euro to Pound Sterling (EUR/GBP) exchange rate could recoup losses if the UK’s GfK Consumer Confidence index shows an unexpected increase in sentiment.
Given that the UK’s general election resulted in an outright win for the Conservative party – a risk minimising outcome – it is possible that the sentiment index increased from 4.
Germany’s retail sales report will be a cause of additional GBP/EUR movement. If the sales data prints in line with forecasts for a MoM increase of 1.0% and an annual increase of 2.5% it may support the common currency.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7151
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – US Growth Data, University of Michigan Confidence Index to Drive ‘Cable’ Movement
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending close to a 20-day low on Thursday and further ‘Cable’ declines could be recorded if tomorrow’s highly influential US growth and confidence reports surprise to the upside.
As it stands, economists are envisaging a marked negative revision to annualised first quarter growth, from 0.2% to -0.9%. This outcome would probably dent demand for the US Dollar, but a stronger figure would push the ‘Greenback’ higher.
Similarly, if the final University of Michigan confidence index is positively adjusted, the GBP/USD exchange rate could end the week on a low.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a high of 1.5385
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: BoE Inflation Report, US Employment Figures, IMF Deadline Ahead
Next week could see extensive Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rate movement as a number of high-profile ecostats are published.
While the UK’s Markit Manufacturing/Services/Construction PMIs are all likely to impact demand for the Pound over the five days, the biggest driver of Sterling movement is likely to be the Bank of England’s (BoE) inflation report.
A hawkish outlook for inflation and/or interest rates would be Pound supportive and could see the British currency advance on the Euro and US Dollar.
The GBP/EUR exchange rate could also gain if Greece defaults on its June 5th debt repayment to the International Monetary Fund (IMF).
The US Non-Farm Payrolls report is likely to be the biggest cause of Pound Sterling to US Dollar (GBP/USD) exchange rate movement next week, with a strong employment report likely to bring forward Federal Reserve interest rate hike expectations and trigger a ‘Cable’ downtrend.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7138, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5288, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6538, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4001