UK Consumer Confidence Dips, Pound Sterling Pares Gains
Both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates declined from Thursday’s highs following the publication of the GfK consumer confidence report.
The sentiment measure fell from 7 to 4 in July, a worse result than the reading of 5 expected by economists.
Any further movement in the GBP/EUR, GBP/USD pairings today is likely to be the result of global economic developments.
German CPI Disappoints, US Produces Mixed Growth Data – GBP/EUR Approaching 1.43
The Pound Sterling to Euro (GBP/EUR) exchange rate achieved a high of 1.4287 during the European session as investors responded to below-forecast German inflation data. The annual pace of consumer price gains in the Eurozone’s largest economy came in at 0.2% in July, down from inflation of 0.3% in June and defying forecasts for no change.
The Pound also held earlier gains against the US Dollar following the publication of US growth data for the second quarter. There were positives and negatives to the report, with the first quarter number being revised from contraction of -0.2% to growth of 0.6% but the second quarter number coming in at 2.3%.
Personal Consumption rose by 2.9% in the second quarter, bettering the 2.7% projection.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5625
As this week’s UK data impressed and reports emerged of possible political upheaval in Greece, the Pound Sterling to Euro (GBP/EUR) exchange rate advanced beyond the 1.42 level while the GBP/USD currency pair held 1.56 after the FOMC gathering.
Pound Sterling to Euro Exchange Rate News: GBP/EUR Trending Close to 8-Year Best Conversion Rate as UK Data Keeps 2015 Rate Hike Hope Alive
The Pound Sterling to Euro (GBP/EUR) exchange rate has advanced steadily over the course of the week in response to improving Bank of England (BoE) interest rate hike expectations.
The BoE’s chief economist might have recently asserted that interest rates don’t need to be adjusted from current levels for some time, but British data has added weight to the argument that borrowing costs could be adjusted before the close of 2015.
This week’s second quarter UK growth report revealed sturdy quarterly expansion of 0.7% – a marked improvement on the first quarter growth of 0.4%.
Yesterday’s UK Mortgage Approvals numbers also exceeded expectations.
The GBP/EUR currency pair was able to breach the 1.42 level today and may continue climbing back towards the previously recorded eight-year high of 1.44.
Prospect of Early Greek Election Dampens Euro to Pound Sterling (EUR/GBP) Exchange Rate Predictions, German Unemployment Rises
The Euro to Pound Sterling (EUR/GBP) exchange rate fell by around half a cent on Wednesday as investors responded to positive UK news and reports that the Greek Prime Minister might call an early election if he continues coming up against austerity resistance from members of his own party.
Tsipras asserted that if Greece is ever to recover, ‘It will require sufficient financing so that the programme is actually credible and the element of debt restructuring, which will allow the Greek economy to walk on, not necessarily two legs as I have said, but four legs. It takes fiscal, structural reforms, financing, debt restructuring.’
The Euro continued trending in a softer position against the Pound after Germany’s unemployment data revealed the most significant increase in joblessness since 2014.
Although the nation’s unemployment rate held at 6.4%, the number of persons out of work rose by 9,000 in July. Economists had expected a fall in unemployment of -5,000.
Some economists dismissed the blip, with the ING’s Carsten Brzeski commenting; ‘Despite the small increase in non-seasonally adjusted terms, this labour market report is impressive. The German labour market has become solid as a rock and looks almost fully immune against any short-term volatility.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: FOMC Statement Forecasts Rate Increase this Year But Fails to Pave the Way for September Adjustment
During the North American session the Pound Sterling to US Dollar (GBP/USD) exchange rate experienced modest fluctuations before stabilising at around the 1.56 level.
The Federal Open Market Committee’s latest policy statement had comparatively little impact on demand for the ‘Greenback’ as the language adopted was little altered from that used in the previous announcement.
While the Fed referred to the current condition of the US labour market as ‘solid’ it also implied that inflation expectations continue to be soft.
The statement saw strategist Dan Greenhaus note; ‘The Fed did not put itself in a position where it had to hike at the next meeting. There is plenty of time between now and the September meeting for FOMC officials to prepare markets for a September hike.’
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: German Inflation, US GDP and UK Consumer Confidence Data Ahead
Although demand for the Euro was a little undermined by Germany’s employment numbers, the GBP/EUR exchange rate did trim gains after the Eurozone’s Economic Confidence, Services Confidence and Consumer Confidence measures all showed improvement.
Later today the Pound Sterling to Euro currency pair could experience additional volatility following the publication of Germany’s Consumer Price Index. The rate of annual inflation is expected to print at 0.3% in July, but a stronger rate of consumer price gains would be Euro-supportive.
Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate could fall back to trending in the region of 1.55 if today’s US second quarter growth data confirms that the world’s largest economy expanded at an annualised rate of 2.5%, as economists anticipate.
Tomorrow’s UK GfK Consumer Confidence survey could prompt a final flurry of GBP/EUR and GBP/USD exchange rate movement before the weekend.
Current GBP, EUR, USD Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4218 while the Pound Sterling to US Dollar (GBP/USD) exchange rate is trending in the region of 1.5616 and the Euro to Pound Sterling (EUR/GBP) exchange rate is achieving 0.7030.