The Pound Sterling to Euro (GBP/EUR), Pound Sterling to Brazilian Real (GBP/BRL) and Pound Sterling to Russian Ruble (GBP/RUB) exchange rates were all trending higher in Wednesday’s European trading as the Greek situation continued and weaker-than-expected Brazilian and Russian data emerged.
Pound Sterling (GBP) Exchange Rate Forecast to Fluctuate on UK GDP Ecostats
The Pound’s experiencing a quiet day for movement by way of data, but Thursday’s forecast to be an influential day for the Sterling exchange rate. The Pound Sterling to Euro (GBP/EUR), Pound Sterling to Russian Ruble (GBP/RUB) and Pound Sterling to Brazilian Real (GBP/BRL) exchange rates could all experience some hefty movement with the release of the UK’s first quarter Gross Domestic Product (GDP) ecostats.
Year-on-year, the first quarter is expected to record 2.5% growth, which could be a development to see the Pound Sterling exchange rate rally. At this point, upbeat growth figures are likely to spur hopes that a Bank of England (BoE) interest rate hike could soon be on the table.
Greek Crisis Weighs on Euro (EUR) Exchange Rate as Investors Look for Signs of Grexit
Meanwhile, the Eurozone is a long way from experiencing interest rate hikes after the European Central Bank recently began a period of quantitative easing. (QE) to spur economic growth. Things seem to be looking up for the currency bloc with Wednesday seeing the GfK German Consumer Confidence Survey hit a 13.5-year-high of 10.2 in June.
However, despite the German’s optimism, the ongoing situation between Greece and its creditors has caused a lack of investor sentiment in the Euro. Greek Prime Minister Alexis Tsipras has held a meeting with his financial team today to discuss the austerity situation. Any developments in the next week could cause major Euro to Pound Sterling (EUR/GBP), Euro to Brazilian Real (EUR/BRL) and Euro to Russian Ruble (EUR/RUB) exchange rate movement as investors look for signs a Grexit could occur.
Russian Ruble (RUB) Exchange Rate Offered Little Support as Russian GDP Sinks Below Forecasts
The Russian Ruble was offered little support when the Russian GDP ecostat came in at -4.3% on the year, after economists had forecast the figure to remain at -3.4%. The International Monetary Fund (IMF) recently suggested that the Russian economy was likely to record 0.2% growth in 2016, with medium-term growth residing at 1.5% annually. The IMF also forecast a -3.4% contraction this year.
Industry expert Steven Pifer commented: ‘The Ruble has certainly stabilised, and some of the numbers are doing a little better… but the bottom line remains that a significant number of major Russian firms are scrambling under sanctions that effectively prevent them from refinancing massive debts with Western lenders.’
Both the central bank and President Vladimir Putin have voiced quite clearly that they believe the worst of Russia’s economic turmoil is behind them. The Central Bank of Russia recently announced that it was resuming foreign exchange purchases to replenish reserves. Additionally, the central bank has cut interest rates twice in the past few months after they were hiked up to 17% at the close of last year.
Putin stated: ‘The central bank’s policy is absolutely adequate… I hope that the prudent policy will continue.’
Brazilian Real (BRL) Exchange Rate Forecast to Sink if Brazilian Consumer Confidence Retreats
The Brazilian Real could experience some movement later in the session with the release of the Brazilian Consumer Confidence ecostat. The release has been postponed to later in the day, but is expected to see confidence in Brazilian citizens decline from 99.0 to 98.4 in May. One economic gauge constructed by the Getulio Vargas Foundation released yesterday stated that its May figure had dropped to 85.1, almost a record low, from the previous month’s 85.6.
The Brazilian nation had seen confidence tumble to the lowest on record in March, spurred by a massive and unexpected current account deficit.
Industry expert Ari Santos commented: ‘The Brazilian outlook is still a big question mark. There’s no good news in terms of growth and we’re almost halfway through the year.’
UPDATE: The Brazilian Consumer Confidence stat came in at 98.7 in May, a slight softening from the 99.0 seen in the previous month, but more favourable than the 98.4 forecast.
The Pound Sterling to Russian Ruble (GBP/RUB) exchange rate is trending at 79.7656. The Pound Sterling to Brazilian Real (GBP/BRL) exchange rate is trading in the region of 4.8391. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the vicinity of 1.4155.