The Pound Sterling to Euro (GBP/EUR) and US Dollar (GBP/USD) exchange rates edged higher by 0.23% and 0.17% respectively on Thursday afternoon.
As British Prime Minister David Cameron prepares to discuss reforming the relationship between Britain and the European Union, the Pound edged lower versus many of its peers. CBI Reported Sales data, due for publication later on Thursday, has the potential to provoke modest Sterling volatility.
After emergency meetings to discuss Greece failed to progress towards the Hellenic nation securing aid from creditors, the shared currency softened. The lack of progress on Wednesday has meant that the talks will spill over into the EU officials’ meeting today; potentially overshadowing other issues in Europe.
The US Dollar is holding relatively steady versus its competitors ahead of labour market data. Should the results print positively, the ‘Greenback’ (USD) is likely to surge as the Federal Open Market Committee (FOMC) will be pressured into hiking the lending rate.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4041.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5730.
Pound Sterling (GBP) Exchange Rate Forecast to Hold Steady against the Single Currency ahead of CBI Reported Sales
Although the solitary British economic data publication doesn’t hold a lot of weighting economically, CBI Reported Sales has the potential to provoke Sterling volatility. June’s Reported Sales are forecast to drop from 51 to 35.
Today’s EU summit in Brussels will be an opportunity for Cameron to propose reforms to the UK’s relationship with the European Union. Cameron is hoping to secure a better deal for the UK before the British public chose whether to stay as part of the EU. The Pound could plummet if EU officials reject the proposals as it would solidify the Euro-sceptic vote on the EU referendum.
Euro (EUR) Exchange Rate Forecast to Trend Statically against the Pound and US Dollar as Greek Optimism Fades
Wednesday’s extensive talks between Eurozone officials and Athens failed to bridge the gaps which prevent Greece from securing aid. Even if the Hellenic nation manages to secure a deal today, the Greek PM still needs to convince his own party members. In addition, the reform package will need to be approved by German officials. Many feel that there will not be enough time for this before huge sums must be repaid to the International Monetary Fund (IMF) on June 30th.
The solitary European economic data publication printed disappointingly, which has aided the Euro depreciation. July’s German Consumer Confidence was forecast to hold at 10.2, but the actual result fell to 10.1.
US Dollar (USD) Exchange Rate Forecast to Trend within a Narrow Range against the Common Currency ahead of Labour Market Data
The US Dollar is holding steady on Thursday after having appreciated on Wednesday in response to growth data meeting with estimates. The growth data reinvigorated speculation that the FOMC will hike the cash rate in 2015. This feeling was compounded by comments from Fed Governor Jerome Powell, who speculated that policymakers would increase the benchmark interest rate twice in 2015.
Thursday’s US labour market data, therefore, will be of significance. Should the data produce positive results the Dollar may climb, increasing the pressure on the FOMC to compensate for a stronger domestic currency with rate increases.
Pound Sterling to Euro (GBP/EUR) and US Dollar (GBP/USD) Exchange Rates Forecast to Fluctuate on EU Summit
The EU Summit is of particular significance to the Pound Sterling to Euro (GBP/EUR) exchange rate for the reasons addressed above. It will also be significant for the US asset because if Greece fails to secure a deal, safe-haven demand will cause the ‘Buck’ (USD) to rally.
Friday’s economic docket will be relatively sparse with a complete absence of British data and a lack of influential European and North American reports.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3985 – 1.4030 today.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the region of 1.5673 – 1.5725.