Newsflash: UK Construction PMI Positive, GBP/USD Holds Gains
On Tuesday the Pound Sterling to US Dollar (GBP/USD) exchange rate recovered some of its recent losses as the UK’s Construction PMI exceeded expectations.
Monday’s Markit Manufacturing gauge fell short of forecasts, but the Construction measure printed at 55.9 in May rather than the 55.0 projected.
This was up from 54.2 in April.
The Pound had previously declined against the US Dollar as the sturdy US ISM Manufacturing print bolstered demand for the ‘Greenback’, but the pairing was able to climb over 0.2% on the day’s opening levels this morning.
Although the GBP/EUR exchange rate remained trending in a softer position after the Construction figure was published, the Pound did manage to claw back some of its decline prior to the release of the Eurozone’s inflation report.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5237
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3885
Newsflash: Pound Falls as UK Manufacturing Fails to Impresses
The Pound paired gains against the Euro and declined by almost 0.5% against the US Dollar after UK’s Markit Manufacturing PMI failed to show the improvement expected.
Economists had forecast that the measure rose in May, advancing from a negatively revised 51.8 to 52.5, but it only achieved 52.0. This number was still above the 50 mark separating growth from contraction however, so it wasn’t all bad news.
After the report was published the Pound Sterling to Euro (GBP/EUR) exchange rate was left trending in the region of 1.3933
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5214
Over the last five days the Pound Sterling to Euro (GBP/EUR) exchange rate moved from a high of 1.4020 to a low of 1.3904, but the pairing could recoup losses next week if Greece defaults on its upcoming payment to the International Monetary Fund (IMF).
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: UK GDP, Confidence Data Weakens Pound
Both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates came under pressure this week as the UK’s first quarter growth data disappointed forecasts and domestic consumer confidence declined.
Although economists had expected the rate of first quarter UK growth to be positively revised to 0.4% on a quarterly basis and 2.5% on an annual basis, it remained at previous estimates of 0.3% and 2.4% respectively.
While this report was backwards looking, and many industry experts believe the UK recovered from this slowdown in the second quarter, it was seen to support the prospect of lower interest rates for longer and demand for the Pound fell accordingly.
Similarly, hopes that the GfK Consumer Confidence gauge would hold at 4 in May were dashed when the index printed at 1.
This sign that sentiment fell following the Conservative party’s outright election win had a detrimental impact on Sterling and both the GBP/EUR and GBP/USD currency pairs closed out the week trending in a softer position.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast – Common Currency Gains Despite Grexit Fears, Italian GDP Beats Forecasts
Even though there continued to be little progress made in the negotiations between Greece and its creditors, the Euro was able to recoup some of its recent losses over the course of this week.
Ecostats for the currency bloc, including Germany’s monthly retail sales figure and Italy’s first quarter GDP, lent the common currency support – as did comments from the Greek Prime Minister.
PM Alexis Tsipras asserted that Greece is close to reaching an agreement which would unlock desperately needed bailout funds and the Euro rallied as a result, even though various European Union officials disputed these claims.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – Federal Reserve Interest Rate Hike Projections Bolster ‘Greenback’ Even as US Growth Contracts
US growth data may have confirmed that the nation’s economy contracted on an annualised basis in the first quarter, but the ‘Greenback’ remained bullish amid bets that the Federal Reserve still intends to increase interest rates at some point this year.
Economists had projected that the US economy shrank by -0.9% year-on-year in the first three months of 2015, rather than expanding by the 0.2% initially projected.
However, the data actually came in at -0.7% and an increase in the University of Michigan Confidence index prevented the US Dollar from suffering at the hands of the report.
One industry expert said of the result; ‘Anybody estimating gross domestic product for the second quarter is kidding themselves, because the trade data is so unpredictable at the moment, and we have no hard numbers yet. I’m guessing there will be a reversal in trade flows, and we’ll see 3% growth in the second quarter. But it could be anywhere between 1% and 5%.’
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: Volatility Expected with Eurozone Inflation, BoE Rate Decision and US Jobs Data Ahead
Over the next five days the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to experience fluctuations as a result of the Bank of England’s interest rate decision and 12 month inflation projection.
Although the central bank is unlikely to make any alterations to fiscal policy at this juncture, the inflation report is likely to have a notable impact on trading, particularly if the BoE adopts a hawkish stance on interest rates or the path of consumer price gains.
Sterling could also advance against the Euro if Greece defaults on its June 5th repayment to the IMF.
The Guardian said of the situation; ‘If a deal is done, the country is likely to face another bout of painful structural reforms and stringent spending cuts, to satisfy the Brussels Group that it’s not throwing good money after bad – and there appears little hope that the debt forgiveness Tsipras and Varoufakis once so stirringly advocated will be part of the package. That means Greece will still face hefty repayments, and the scrutiny of its paymasters, for years to come.’
In terms of ecostats from the Eurozone, inflation data for the currency bloc as a whole and Germany are likely to have the biggest impact on GBP/EUR exchange rate movement.
The Pound Sterling to US Dollar (GBP/USD) exchange rate, meanwhile, could gain if Friday’s US Non Farm Payrolls report fails to show the jobs increase expected by economists.
An inferior employment number could prompt investors to push back their recently raised expectations regarding interest rate adjustments.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7188 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3910