The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates were both trending higher in the first half of Thursday’s European session while the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending lower.
FOMC Announcement Dampens Fed Rate Hike Bets – US Dollar (USD) Exchange Rate Softer
Thursday’s Federal Open Market Committee (FOMC) announcement saw interest rates remain on hold at 0.25%, while the Fed downgraded growth forecasts for this year and dampened hopes of an interest rate hike in the near future.
Industry expert Kathy Lien commented: ‘Expectations were high going into the monetary policy announcement and unfortunately for Dollar bulls hoping for a sharp upside breakout, (Fed Chair) Janet Yellen failed to deliver.’
The Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates are all forecast for an interesting week with the release of the Bank of England’s (BoE) meeting minutes, the Federal Open Market Committee (FOMC) interest rate decision, Greece’s Eurogroup meeting deadline and Canadian, US and UK inflation ecostats due out.
The FOMC decision is likely to be a major source of market movement on Wednesday and any hawkish comments regarding interest rate hikes could see the US Dollar (USD) rally.
Industry expert John Bellows commented: ‘Our expectation is that the Fed is going to reiterate a desire to hike interest rates this year and signal it expects two hikes this year.’
Pound Sterling (GBP) Exchange Rate Jumps after UK Wage Growth and UK Unemployment Rate Figures
Wednesday saw the Pound Sterling to US Dollar (GBP/USD) exchange rate trend within a narrow range ahead of UK wage growth, UK Unemployment Rate and UK Employment Change data, while the Pound Sterling to Euro (GBP/EUR) exchange rate suffered losses as the situation in Greece continued. The GBP/EUR exchange rate, although slightly softer is flirting with the 1.39 threshold.
UPDATE: The UK Unemployment Rate remained stable at 5.5% in April, while Average Weekly Earnings data recorded a jump from 2.3% to 2.7% spurring hopes of a Bank of England (BoE) interest rate hike. Although the BoE meeting minutes showed the entire Monetary Policy Committee (MPC) had voted to keep interest rates on hold, with such upbeat labour market data occurring, there could soon be a policymaker divergence.
Canadian Dollar (CAD) Exchange Rate Forecast: Oil Prices and Manufacturing Sector Slips, Q2 Growth Predictions Deteriorate
The Canadian Dollar (CAD) exchange rate was trending lower in Tuesday’s European trading as oil prices fell and Monday’s domestic data weighed. Monday saw Canadian Manufacturing Shipments fall by -2.1% in April, a drop four times larger than the forecast -0.5%. The ecostat marked the third contraction in the past four months and raised concerns that the Canadian economy may post weaker-than-forecast second quarter growth figures.
Industry expert Mike Moffatt commented: ‘We were hoping that manufacturing would take some of the slack left by oil and gas, but that doesn’t seem to be happening. It suggests that the Canadian economy doesn’t appear to be recovering as fast as we’d like.’
Meanwhile, Canadian Existing Home Sales rose by 3.1% in the month of May after the previous month’s 2.3% growth.
OPEC Increases Output – Oil Prices Sink, Canadian Dollar (CAD) Exchange Rate Weakens
Oil prices fell for the third consecutive session in Monday’s North American trading as the global oversupply continued to weigh on the commodities value. The Organisation of Petroleum Exporting Countries (OPEC) revealed that it increased output to 31.1 million barrels a day in May—the highest level of production since October 2012. The figure showed that OPEC had exceeded daily demand by 1.8 million barrels every day, whilst also residing 1 million barrels above its quota.
Industry expert Dominick Chirichella commented: ‘The fact remains that supply is continuing to outstrip demand. It is very difficult to see how the massive oversupply situation is going to reverse in the short to medium term.’
The Canadian Dollar to US Dollar (CAD/USD) exchange rate is trending at 0.8104.
The Canadian Dollar to Euro (CAD/EUR) exchange rate is trending at 0.7189.
The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is trending at 0.5207.
US Dollar (USD) Exchange Rate Forecast: US Inflation and FOMC Decision Forecast to cause Major USD/EUR, USD/CAD, USD/GBP Movement
Meanwhile, the US Dollar (USD) has also had an interesting start to the week with a mixed bag of ecostats making their way to the table on Monday. The US Industrial Production number registered -0.2% contraction in May, rather than the 0.2% growth economists had forecast.
Meanwhile, the US Manufacturing Production number also registered -0.2% contraction in May, despite economists forecasting 0.3% growth. The US manufacturing sector is now officially in a technical recession on account of falling oil prices, a strong US Dollar (USD) exchange rate and an overall global slowdown.
The US Empire Manufacturing stat also failed to reach the 6.00 economists had forecast, diving to -1.98 instead. A silver lining for the US Dollar (USD) came in the form of the NAHB Housing Market Index, which rose to a nine-month high of 59 in June.
The rest of the week will see the release of US Consumer Price Index (CPI) data as well as the FOMC interest rate decision. Investors are hoping for an interest rate hike in the near future and any developments that could spur adjustments are likely to cause a US Dollar (USD) exchange rate rally.
The US Dollar to Euro (USD/EUR) exchange rate is trending at 0.8874.
The US Dollar to Canadian Dollar (USD/CAD) exchange rate is trending in the region of 1.2341.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is trending in the region of 0.6420.
Euro (EUR) Exchange Rate Forecast: EUR Predicted to Drop if Thursday’s Eurogroup Meeting Continues to See Greece and Creditors at Loggerheads
The Euro (EUR) exchange rate is having a tough time at the moment as things aren’t too peachy in the Eurozone. The situation between Greece and its creditors appears to be heading for a major meltdown as talks fail to see any resolution or agreement from either side.
Market analyst Craig Erlam commented: ‘Negotiations have hit rough patches on numerous occasions throughout this process but this is the first time that they appear to have totally collapsed. At this stage it is difficult to see how this will be resolved without significant compromises being made, something both sides have absolutely no interest in.’
Thursday’s Eurogroup meeting is expected to be crunch time for Greece and the Euro (EUR) exchange rate. If no agreement can be made, a Greek default could be imminent.
Greek PM Tsipras: Euro Summit On Greece Is Positive Development — RTRS -Those Betting On Crisis Will Be Proven Wrong
— Live Squawk (@livesquawk) June 19, 2015
Additionally, Greek politician Stavros Theodorakis stated today: ‘The government will not pay the IMF, if by the end of the month an agreement hasn’t been achieved with lenders.’
Meanwhile, the German ZEW Economic Sentiment Survey recorded a surprisingly large drop from 41.9 to 31.5 in June, rather than residing at 37.3 as economists had forecast.
The Euro to US Dollar (EUR/USD) exchange rate is trending at 1.1274.
The Euro to Canadian Dollar (EUR/CAD) exchange rate is trending at 1.3908.
The Euro to Pound Sterling (EUR/GBP) exchange rate is trending at 0.7238.
Pound Sterling to Euro (GBP/EUR), US Dollar (GBP/USD), Canadian Dollar (GBP/CAD) Exchange Rate Forecast- BoE Rate Hikes in 2016?
Wednesday’s forecast to be a big day for the Pound Sterling (GBP) exchange rate with the release of the Bank of England’s meeting minutes. The BoE minutes will reveal whether a policymaker divergence occurred in the June meeting; if so, a Pound Sterling (GBP) rally could occur.
It appears as if many economists are pricing in a Bank of England interest rate hike in the first quarter of 2016.
Scotiabank representative Alan Clarke commented: ‘Headline inflation will be less of an obstruction by then. The best probability is February but I wouldn’t rule it out being a bit earlier and equally it could be a bit later if the growth data disappoint.
UK Non-Core Inflation in Line with Forecasts, Core CPI Falls Short – GBP/EUR, GBP/USD Exchange Rates Trend Lower, GBP/CAD Stable
Monday saw the release of the UK’s latest inflation figures, which largely printed in line with forecasts. The annual inflation rate climbed from -0.1% to +0.1% in May as the month registered 0.2% growth. However, the UK’s core inflation rate rose from 0.8% to 0.9% in May on the year, a little shy of the 1.0% forecast.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending at 1.9358.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending in the region of 1.5731.
The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3963.