Although the outlook of the Pound (GBP) remains relatively subdued on Friday the GBP/USD exchange rate is continuing to benefit from a weaker-than-expected US GDP report, with the odds of a 2015 Fed interest rate rise having declined.
Pound Sterling (GBP) Sentiment Remains Muted Today after Weak UK Consumer Confidence
Following a mixed bag of economic data yesterday, the Pound (GBP) has remained relatively bearish on Friday, still partly weighed down by the week’s disappointing UK GDP report. While Nationwide House Prices unexpectedly advanced, from 3.8% to 3.9% growth on the year, Mortgage Approvals were shown to have declined in September. As fears have been circulating that the UK housing market is in a bubble, these figures did little to reassure traders or increase the appeal of Sterling.
CBI Reported Sales also slumped substantially further than anticipated, slipping from 49 to 19 on the month in October, suggesting that national retail demand was stalling. As the Christmas shopping season is imminently approaching, however, this was not necessary such a severe sign of weakness within the retail sector as might have been thought. Nevertheless, as this morning’s GfK Consumer Confidence Survey fell short there remains no particular incentive to buy into the Pound ahead of the weekend.
Positive German Inflation Data Bolstered Euro (EUR) Exchange Rates ahead of Eurozone CPI Figure
After the German Unemployment Change and Eurozone Economic Confidence readings printed more positively than forecast on Thursday the Euro (EUR) returned to an uptrend against rivals. Regaining ground lost overnight in the wake of a hawkish Federal Open Market Committee (FOMC) policy statement, the common currency was shored up further by stronger-than-expected German Consumer Price Index data. On the year inflation within the Eurozone’s powerhouse economy was shown to have increased by 0.3% while the gauge steadied to 0.0% on the month, offering reassurance after September’s negative inflation reading.
German Retail Sales failed to rise quite so far as forecast on Friday morning, but as sales showed a clear improvement from August this did not particularly dampen sentiment towards the single currency. Pundits remain generally optimistic ahead of the latest Eurozone CPI report, with expectations high that inflationary pressure in the currency bloc will have strengthened in October.
US Dollar Currency News: Slowed US GDP Failed to Support Bets of 2015 Fed Interest Rate Rise
Although the hawkish suggestion by the FOMC that a December interest rate was under consideration substantially boosted the US Dollar (USD) across the board, this buoyancy was not especially long-lived. The odds of a 2015 rate hike took a bit of a blow as both the third quarter US GDP and Personal Consumption figures demonstrated greater slowing than traders had been anticipating, with economic growth shrinking particularly sharply from 3.9% to 1.5%.
A resurgence could be in store for the ‘Greenback’, however, with the publication of the Personal Consumption Expenditure Core figure and the finalised October University of Michigan Confidence Index. As both are expected to show improvement, this could lend some support to the prospect of a more imminent interest rate move from the Fed, bolstering the US Dollar against rivals once more.
Current GBP, EUR, USD Exchange Rates
At time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3938, while the Pound Sterling to US Dollar (GBP/USD) pairing was on an uptrend around 1.5331. Meanwhile, the Euro to US Dollar (EUR/USD) conversion rate was climbing in the range of 1.1000.