GBP/EUR, GBP/USD Exchange Rates Largely Hold Gains as Conservatives Take Majority
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates modestly trimmed gains in the hours following the publication of the Exit Poll as its predictions appeared to be coming true.
However, although some industry experts bashed the poll (with one going so far as to say he would ‘eat his hat’ if it proved accurate) the Conservative Party was soon shown to have even more support than projected.
By securing over the 326 seats needed to form a majority government, the Tories have dispelled instability concerns and bolstered demand for the Pound.
Although the UK’s slightly disappointing trade figures took some of the shine off Sterling, the British currency is still preparing to enter the weekend trending in a stronger position against its major peers.
That being said, the fact that the US Non Farm Payrolls report did show a decline in the US unemployment rate (from 5.5% to 5.4%) put some downward pressure on the GBP/USD pairing.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3748
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5419
Pound Sterling Exchange Rate Strengthens Across the Board as Exit Poll Shows Conservative Win
With the exit poll giving the Conservative party an unexpectedly large amount of parliamentary seats, the Pound Sterling to Euro (GBP/EUR) exchange rate surged above 1.38 while the Pound Sterling to US Dollar (GBP/USD) exchange rate pushed above the 1.55 level.
— BBC World Service (@bbcworldservice) May 7, 2015
Breaking News: GBP/EUR Exchange Rate Advances Beyond 1.35
A sign of defiance from the Syriza-led Greek government saw the Euro soften against the majority of its currency counterparts on Thursday afternoon and the GBP/EUR exchange rate was able to advance to a high of 1.3505
UK Election Strain Sees GBP/EUR Fluctuate around 1.33
Although the Eurozone published mildly disappointing economic data on Thursday, the fact that UK residents are taking to polling stations across the country and deciding the fate of the political landscape pushed the Pound Sterling to Euro (GBP/EUR) exchange rate lower.
German Factory Orders were shown to have increased by a seasonally adjusted 0.9% on the month in March, less than the 1.5% gain anticipated.
Similarly, Germany’s Markit Construction PMI printed at 51.0, falling from 53.3 and moving closer towards the 50 mark separating growth from contraction.
Later in the European session the Eurozone’s Retail PMI printed at 49.5, up from 48.6 in March.
However, Germany’s retail index eased from 53 to 52.6 in April.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3382
The Pound Sterling to Euro (GBP/EUR) exchange rate fell to 1.34 on Wednesday as Greece met its debt obligations while the Pound Sterling to US Dollar (GBP/USD) exchange rate was able to trend at 1.52 thanks to poor US labour market data – but with the UK general election upon us, volatility can be expected.
GBP/EUR, GBP/USD Exchange Rate Forecast – UK Services PMI Fails to Support Pound Sterling as UK General Election Heats Up
Although the UK’s Services PMI showed a surprisingly strong increase in output in April, the Pound failed to exert itself and GBP/EUR, GBP/USD exchange rate movement was largely the result of developments in the Eurozone and US.
Last Friday the UK’s Manufacturing PMI fell short and this week’s Construction index also came in below expected levels. However, the Markit Services PMI bucked the trend and advanced to 59.5 last month.
The surprising increase saw some economists voice concerns over the services-driven nature of the UK’s economic recovery and the Pound didn’t experience the upswing you might usually expect to follow such an encouraging report.
Part of the reason for the Pound’s lack of momentum was speculation surrounding the UK general election – which is being hailed as the most unpredictable in living memory.
Reuters said of the result; ‘Britain’s National Institute for Economic and Social Research also said on Wednesday it expected growth would pick up again, although the weak first quarter weakened its forecast for British growth in 2015 as a whole. The PMI is likely to be highlighted by Prime Minister David Cameron on his last full day of his election campaign, in which he has focused on the recovery in the economy since early 2013.’
Now voting day is finally upon us we can expect considerable volatility in the currency market, with potentially large shifts in both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News – Euro Gains as PMI’s Show Improved Growth in France and Spain, Greece Pays IMF
On Wednesday the Pound Sterling to Euro (GBP/EUR) exchange rate returned to trending in the region of 1.34 as the Euro’s appeal increased as a result of positively revised service sector data for the Eurozone and several of its largest economies (including Spain, France and Italy).
The common currency was also boosted against its peers as Greece managed to scrape enough Euros together to pay the International Monetary Fund (IMF) 200 million Euros.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News – US ADP Employment Report Misses Forecasts, will Non-Farm Payrolls also Disappoint?
While the Pound drifted lower against the Euro, the British currency was able to advance on the US Dollar after yet another North American ecostat came in below forecast levels.
The ADP Employment report showed that the US added considerably fewer positions than expected in April. While the ADP and Non-Farm Payrolls figures don’t always correlate, some investors believe that this result means we could be in for disappointment on Friday.
As the Federal Reserve has linked sustained improvement in the US labour market to the first increase in borrowing costs, a less-than-impressive result could ensure that the Pound Sterling to US Dollar (GBP/USD) exchange rate doesn’t suffer too greatly as a result of the political upheaval in the UK.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – UK Election Outcome Could Drive the Pound Lower
Economic data is unlikely to have much of an impact on either the Pound Sterling to Euro (GBP/EUR) or Pound Sterling to US Dollar (GBP/USD) exchange rates today given the fact that investors will be firmly focused on the UK general election and its potential outcomes.
In the view of industry expert Andrew McHattie; ‘It is quite likely that any dip in confidence from either a political vacuum or an undesirable alliance of political parties could lead to capital outflows and a fall in the value of the Pound […] It may be the case that the more uncertainty that arises over the result, and the more horse-trading is required to form a government, the more the Pound will weaken. But when a government is formed, it is probably not a simple case of ‘buy a Conservative win; sell a Labour victory’ as far as the Pound is concerned.’
Although data won’t be of paramount importance in the hours ahead, there are some ecostats from the Eurozone to be aware of, including German Factory Orders numbers for March, German/Eurozone Retail PMI and German Construction PMI.
In terms of US data, the reports to be aware of are the US initial jobless/continuing claims figures and the US Consumer Credit number.
Positive ecostats from the Eurozone would indicate that the European Central Bank’s (ECB) quantitative easing programme is having the desired effect and could help the Euro gain on the Pound in the midst of an uncertain political landscape.
Similarly, if the US reports alleviate some of the concerns raised by this week’s mixed bag of US data we could see the GBP/USD exchange rate moving back towards the key resistance level of 1.50 before the weekend.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3440, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7437, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5244 and the US Dollar to Pound Sterling exchange rate was trending in the region of 0.6560