Newsflash: Upbeat UK Growth Data Pushes GBP/EUR, GBP/USD Higher
After UK growth data for May impressed, the Pound Sterling to Euro (GBP/EUR) exchange rate jumped by 0.9% and hit a high of 1.3747.
Hopes that the UK economy rebounded in the second quarter following the slowdown recorded in the first appeared justified as the UK economy was shown to have expanded by 0.6% in May, up from upwardly adjusted growth of 0.5% in April.
The National Institute of Economic and Social Research (NIESR) stated; ‘Our monthly estimates of GDP suggest that output grew by 0.6% in the three months ending in May after growth of 0.5% in the three months ending in April 2015. These estimates are consistent with a rebound of economic growth in the second quarter of this year. For the year as a whole, we forecast GDP growth of 2.5% per annum*. We continue to expect the MPC to start raising interest rates in the first quarter of 2016.’
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3734
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5511
Newsflash: UK Industrial Production Increases, Pound Sterling Gains on Euro, US Dollar
The Pound gained on both the US Dollar and Euro as the European session progressed on Wednesday and the UK’s Industrial Production data impressed.
Although Manufacturing Production fell short, industrial production rose by more-than-expected on both the month and year.
Later today the UK’s GDP estimate for May could be responsible for additional GBP/EUR, GBP/USD movement.
As stated by Reuters; ‘British industrial output was much stronger than expected in April thanks to a surge in oil and gas production, but manufacturing was hit by a decline in pharmaceuticals, official data showed on Wednesday. Industrial output rose by 0.4 percent on the month, above economists’ average forecast for a 0.1 percent increase, after rising by 0.6 percent in March, the Office for National Statistics said. The increase will raise hopes that Britain’s economy picked up speed in the second quarter.’
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3655
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5452
Whether or not the Pound Sterling to Euro (GBP/EUR) exchange rate advances beyond 1.36 or falls back to the 1.34 level depends partly on how strongly today’s UK Industrial Production and growth figures print, but the ongoing Greek bailout saga is also likely to have an impact.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News – HSBC Job Losses Outweigh UK Trade Deficit Data
The Pound Sterling to Euro (GBP/EUR) exchange rate softened on Tuesday as Greece presented a new list of reforms to its creditors and HSBC announced the cutting of 8,000 British jobs.
Given that the strength of the UK labour market has been one of the shining stars of the nation’s economic recovery, the fact that it will soon be taking such a big hit wasn’t well received.
As stated by industry expert Ian King; ‘Many factors lie behind the announcement, some going back years. First and foremost is the need to generate a competitive return to shareholders. HSBC’s shares have underperformed those of rivals in recent years while its return on equity last year – a measure of investor returns – was a feeble 7.3%. To raise that above 10%, as HSBC aims, it must either grow its business or cut costs.’
The announcement prevented the Pound from enjoying the rally it might otherwise have experienced in response to the UK’s comparatively upbeat trade data.
The UK trade deficit was shown to have narrowed sharply in April, improving second quarter growth prospects in the process.
The Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.3585
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Eurozone GDP Prints at 0.4%, Greek Bailout Proposal Rejected, Hollande and Merkel Meet
While the Pound was dealing with the pressure of domestic concerns, the Euro was able to hold its own thanks to a sturdy first quarter growth print.
With expansion of 0.4%, the Eurozone outgrew both the UK and US – indicating that the Eurozone’s expansive Quantitative Easing measures are having the desired effect.
The Euro to Pound Sterling (EUR/GBP) exchange rate was also buoyed by the news that Greece submitted a new set of reform proposals to its creditors as it showed that the Hellenic nation is serious about reaching an accord.
However, that proposal was rejected and the next stage of the saga sees German Chancellor Angela Merkel and French President Francois Hollande meeting with Greek Prime Minister Alexis Tsipras in order to try and break the current impasse.
In the past Merkel has asserted her commitment to helping Greece remain part of the Eurozone, which has given rise to hopes that the German leader might be the driving force behind concessions being made today.
A member of the German parliament was quoted as saying; ‘We want Greece to stay in the Euro, but whether this is achievable depends entirely on Greece. The conditions have to be met.’
A breakdown in communications or lack of any notable progress today would be Euro-negative.
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7365
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: French Industrial Production Dips, UK Manufacturing/Industrial Output Data and GDP Estimate Ahead
The Pound Sterling to Euro (GBP/EUR) exchange rate was able to recoup some of its losses on Wednesday as French Industrial Production data disappointed expectations. Output plummeted by -0.9% on the month in April, following a revised drop of -0.3% in March. Economists had expected 0.1% growth.
On the year industrial production in the Eurozone’s largest economy came in at 1.1%, higher that the 0.9% estimate.
As the day progresses any developments in the Greek bailout negotiations are likely to have a fairly profound impact on Pound Sterling to Euro (GBP/EUR) exchange rate movement.
The week’s biggest UK ecostats will also be in focus.
Poor UK Industrial and Manufacturing Production figures would weigh heavily on the Pound, as would a soft growth estimate for May from the National Institute of Economic and Social Research (NIESR).
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7358 and the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3587