GBP/EUR and GBP/USD Rally as UK Unemployment Rate Falls
A slide in the UK’s unemployment rate and an increase in average earnings gave the Pound a solid boost on Wednesday and Sterling jumped against both the Euro and US Dollar.
While the GBP/EUR pairing rose above 1.40, the GBP/USD exchange rate was able to achieve its strongest level of 2015 so far.
The UK’s unemployment rate fell to 5.5% from 5.6% as the nation added 202,000 positions in the three months through March.
The employment gain wasn’t quite as strong as economists had envisaged, but average weekly earnings including bonuses climbed advanced by 1.9% in the three months through March – exceeding the 1.7% projection.
With the BoE’s inflation report ahead, further GBP/EUR and GBP/USD exchange rate movement can be expected.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4006
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5736
Newsflash: GBP/EUR Sheds 0.8%, GBP/USD Trending in Narrow Range
With Greece unexpectedly paying the IMF early and reports emerging that the UK’s in-out EU referendum could take place next year (rather than in 2017 as originally projected), the Pound softened against the Euro.
The GBP/EUR exchange rate had previously advanced to 1.40 on concerns Greece could default but shed over 0.8% on Tuesday morning.
If today’s UK Industrial/Manufacturing production figures print well, the Pound may recover losses.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3854
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5568
BoE Leaves Rates on Hold, Pound Extends Advance
As expected by economists, the Bank of England (BoE) opted to leave interest rates on hold at this month’s gathering.
While the bank issued no policy statement following the decision, investors are hoping that more information will be provided on Wednesday with the BoE inflation report.
According to Reuters; ‘Economists say the election result is likely to reinforce the Bank’s view that there is no need for interest rates to rise soon as Cameron’s government will continue to tighten fiscal policy with the aim of eliminating its budget deficit by 2019.’
However, some industry experts believe that the election result could actually encourage the BoE to bring forward its interest rate hike projections as the UK political climate will be stable and the Conservative’s policy measures may see the UK economic outlook continue to improve.
Hopes that the BoE might adopt a fairly hawkish outlook on the subject of domestic inflation helped Sterling advance beyond 1.40 against the Pound and 1.55 against the US Dollar.
The Pound’s gains against the Euro were also due to a decided lack of progress in the Greek bailout negotiations.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3901
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5495
BoE Interest Rate Decision Ahead – GBP/EUR Advances, GBP/USD Trims Gains
Ahead of the Bank of England’s interest rate announcement, the Pound Sterling to Euro (GBP/EUR) exchange rate advanced 0.2% while the Pound Sterling to US Dollar (GBP/USD) exchange rate fell by the same amount.
Although the BoE isn’t expected to make any alterations to fiscal policy today, investors will be looking ahead to the publication of minutes from the gathering to see whether they show any division among members of the Monetary Policy Committee (MPC) on the subject of interest rate increases.
The Greek bailout situation will be the main driving force of GBP/EUR movement today while the GBP/USD currency pair could fluctuate in response to the US Labour Market Conditions Index.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3819
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5428
With the surprise UK general election outcome bolstering demand for the Pound, the Pound Sterling to Euro (GBP/EUR) exchange rate breached 1.38 on Friday while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending above 1.54. This week could see both pairings push higher if the Bank of England (BoE) delivers a positive inflation forecast.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: Conservatives Win 2015 UK General Election, Pound Jumps Despite US Employment Data
Both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates surged on Friday as investors responded to the outcome of the UK general election with gusto.
The prospect of a hung parliament and lengthy coalition negotiations had weighed on the Pound in the lead up to voting day, so the fact that the Conservatives shocked everyone with an outright win was viewed as Sterling-supportive.
Positive trade data for Germany and a decline in the US unemployment rate did little to temper the Pound’s gains and both the GBP/EUR and GBP/USD currency pairings entered the weekend trending in a stronger position.
Industry expert Richard Buxton said of the decisive result; ‘A good general election result for the UK economy, but not a good day for the United Kingdom. The scale of the SNP’s victory in Scotland, together with the scale of UKIP’s share of the national vote, at over 12%, confirms the extent to which we are an increasingly divided nation.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: Meeting of European Finance Ministers and European Central Bank (ECB) Could Alter ‘Grexit’ Odds
In the week ahead the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to be subject to volatility inspired by the ongoing negotiations between Greece and its creditors.
Financial chiefs from the Eurozone and representatives from the ECB will be gathering on Monday to discuss the situation, and with Greece due to make a substantial payment to the International Monetary Fund (IMF) some progress has to be made.
Any hints that talks are getting nowhere – and that a ‘Grexit’ is still on the cards – would deplete demand for the Euro and could help the GBP/EUR pairing approach the 1.40 level once more.
Of course, the week’s major Eurozone ecostats will also be having an impact on GBP/EUR trading.
The main ones to be aware of include the region’s Industrial Production numbers and the Eurozone’s first-quarter growth figure.
Economists have forecast that industrial production increased modestly in March on a month-on-month basis, but that the rate of output slowed on the year.
The pace of growth in the currency bloc is expected to ease to 0.3% on a quarter-on-quarter basis and be up 0.9% on the year.
Subpar data for the Eurozone would weigh on the common currency over the next five days.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: US Retail Sales Number Could Up Federal Reserve Interest Rate Hike Bets
Friday’s US Non-Farm Payrolls report showed a fairly solid increase in positions and a decline in the US Unemployment Rate.
Although the jobs gain wasn’t as encouraging as expected, the data still supported the case in favour of the Federal Reserve making a positive adjustment to interest rates in September.
The central bank has frequently stressed that any alterations to borrowing costs will be data-dependent, so if this week’s run of economic reports for the world’s largest economy print positively, the US Dollar could easily recoup recent losses against the Pound.
The US is due to publish the Fed Labour Market Conditions Index, JOLTs Job Openings numbers, the NFIB Business Optimism Index, the Monthly Budget Statement, MBA Mortgage Applications figure, Advance Retail Sales, Business Inventories data, Continuing/Initial Jobless Claims, the nation’s Producer Price Index, Manufacturing/Industrial Production numbers and the preliminary University of Michigan Confidence Index.
Of these reports the sales and sentiment data will be the most influential.
A rise in consumer spending and/or confidence would be US Dollar supportive. However, should the reports fall short of forecasts the Pound Sterling to US Dollar (GBP/USD) exchange rate could make a break for the +1.55 level.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rates Forecast to Fluctuate after BoE Interest Rate Decision and Inflation Report
News from the Eurozone and US will be inspiring GBP/EUR and GBP/USD exchange rate movement this week, but investors will also be taking a keen interest in the Bank of England’s (BoE) interest rate decision and inflation report.
Although the Bank of England is unlikely to make any adjustments to borrowing costs or quantitative easing at the moment, the Conservative election win and recent encouraging UK services data may see a couple of the more hawkish members of the Monetary Policy Committee (MPC) break away from the pack and begin voting in favour of a rate hike.
Such a development would give the Pound a leg up against its peers.
Similarly, positive revisions to the BoE’s inflation/growth projections would be Sterling supportive.
Conversely, any words of warning from the BoE (or references to the detrimental impact of a strong domestic currency) may inspire Sterling losses.
The UK’s latest batch of employment figures will also be a key player in the currency market this week, with the unemployment rate and average earnings numbers being of particular interest.
On Sunday the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3803 and the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5458