The Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates were all trending lower in Wednesday’s European trading despite upbeat UK employment data, after the Bank of England (BoE) cut growth forecasts in its inflation report.
Pound Sterling to Euro (GBP/EUR), US Dollar (GBP/USD), Canadian Dollar (GBP/CAD) Exchange Rates Flop Following Dovish BoE Growth Report
The Pound (GBP) took an almighty tumble against the Euro (GBP/EUR), US Dollar (GBP/USD) and Canadian Dollar (GBP/CAD) when the BoE forecast growth to reach only 2.4% in 2015 rather than the 2.9% expected three months ago.
The Pound Sterling (GBP) exchange rate had been propped up earlier in the session when the UK’s Unemployment Rate dropped to a seven-year low of 5.5%.
Economist John Hawksworth suggested that the UK has become ‘an incredible job-creating machine’.
Hawksworth continued: ‘There are also more convincing signs than ever before that this extra demand for labour is causing the market to tighten, pushing up regular pay growth to 2.2%. With consumer price inflation stuck at zero, workers are experiencing solid real pay rises for the first time since the recession.’
Excluding bonuses, British Average Weekly Earnings rose from a positively revised 1.9% to 2.2% in March.
Euro (EUR) Exchange Rate Trending Lower Amid Greek Negotiations, PM Alexis Tsipras Proclamation Ahead
Meanwhile, the Euro (EUR) exchange rate was generally trending lower after a mixed bag of currency bloc data emerged. French Gross Domestic Product (GDP) data for Q1 came in at 0.7% on the year. However, Germany’s GDP stat failed to impress, falling from 1.4% to 1.1%. Eurozone GDP reached 1.0% in Q1 year-on-year, in line with forecasts.
However, Greek negotiations continue to shroud the Euro to Pound Sterling (EUR/GBP), Euro to US Dollar (EUR/USD) and Euro to Canadian Dollar (EUR/CAD) exchange rates as events unfold.
There’s a certain element of mystery hanging over the situation after finance minister Yanis Varoufakis admitted the nation would run out of funds in two weeks, and with rumours that Greek Prime Minister Alexis Tsipras will be making some kind of proclamation following a cabinet meeting this afternoon.
The US Dollar (USD) exchange rate is also awaiting events this afternoon with the highly influential US Advance Retail Sales ecostat due for release. Investors in the US Dollar (USD) are heavily scrutinising US data at the moment after a recent string of disappointing ecostats emerged, damaging Federal Reserve interest rate hike bets.
US Advance Retail Sales Forecast for Major US Dollar to Pound Sterling (USD/GBP), Euro (USD/EUR) and Canadian Dollar (USD/CAD) Exchange Rate Movement
However if today’s US Advance Retail Sales prints favourably, the US Dollar to Euro (USD/EUR), US Dollar to Canadian Dollar (USD/CAD) and US Dollar to Pound Sterling (USD/GBP) exchange rates could rally.
The Canadian Dollar (CAD) is having a quiet start to the week for ecostats, but Thursday is expected to spice up ‘Loonie’ exchange rate trading with the release of the Canadian New Housing Price Index.
Friday will continue the North American data stream with Canadian Existing Home Sales and Manufacturing Shipments figures.
OPEC Report Hints at Crude Oil Prices Remaining below $100 for Decade, Goldman Sachs Weighs In
Meanwhile, oil prices could remain below $100 for the next decade, according to the Organisation of Petroleum Exporting Countries (OPEC) recent strategy report. Crude oil recently rallied over $60 a barrel, but banking major Goldman Sachs suggest that the recent rebound in prices can’t last.
Goldman Sachs managing director Damien Courvalin commented: ‘While low prices precipitated the market rebalancing, we view the recent rally as premature with crude oil prices expensive relative to current and forecast fundamentals. As a result, we believe that the recent price rally is premature (and) that prices need to sequentially weaken, to resume the oil market rebalancing as well as help correct the still intact imbalance of too much capital looking for opportunities in the energy space.’
The Canadian Dollar (CAD) to Euro (CAD/EUR), Canadian Dollar to US Dollar (CAD/USD) and Canadian Dollar to Pound Sterling (CAD/GBP) exchange rates could all fluctuate in the rest of the week on any crude oil price developments.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending at 1.8830. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.5752; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3847.