The Pound Sterling to Euro (GBP/EUR) exchange rate began Thursday trending lower, while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading higher ahead of UK Gross Domestic Product (GDP) figures.
Greek Prime Minister Hints that Negotiations are in the ‘Final Stretch’ – Euro (EUR) Exchange Rate Jumps
The GBP/EUR exchange rate softened on Wednesday when it appeared that Greece was edging closer to a deal.
Greek Prime Minister Yanis Varoufakis commented: ‘Calm and decisiveness needed now that we’re on the final stretch to an agreement.’
UK GDP stats will be out at 09:30 GMT and are likely to cause major Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rate movement.
Earlier… The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates are forecast for choppy trading in the week ahead with a wealth of influential US ecostats (including GDP, Durable Goods Orders and Personal Consumption) due for release, as well as the unfolding of the Greek situation.
Greece Draws up Austerity Deal as EU and IMF Differences Delay Progress, Euro (EUR) Exchange Rate Climbs
Wednesday afternoon’s trading saw the Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Euro (GBP/EUR) exchange rates trend lower after Greece stated that it was drawing up an agreement with creditors.
One government official stated: ‘At the Brussels Group today procedures to draw up a staff-level agreement are beginning. There remains a problem with the differing stance among the institutions. If an agreement by the IMF was not needed, the deal would have closed by now.’
German GfK Consumer Confidence Hits 13 and-a-half Year High – Euro (EUR) Exchange Rate Climbs
Wednesday’s trading saw the Pound Sterling to Euro (GBP/EUR) exchange rate soften after the GfK German Consumer Confidence stat printed favourably, while the Pound Sterling to US Dollar (GBP/USD) exchange rate advanced ahead of US MBA Mortgage Applications data.
The GfK German Consumer Confidence Survey rose to 10.2 in June from the previous month’s 10.1; economists had forecast a fall to 10.0. The index registered a 13 and-a-half year high.
GfK stated: ‘Very strong domestic demand in Germany and the low rate of inflation are fuelling economic expectations and consumers’ willingness to spend. That is the highest level since October 2001. The consumer climate in Germany remains in a moderate uptrend.’
Tuesday’s European trading began with the Pound Sterling to Euro (GBP/EUR) exchange rate trending higher, while the Pound Sterling to US Dollar (GBP/USD) exchange rate tumbled lower.
US Durable Goods Orders Data Allows US Dollar (USD) Exchange Rate to Climb
The Pound Sterling to US Dollar (GBP/USD) exchange rate tumbled after US Durable Goods Orders data printed favourably. The headline Durable Goods Orders contracted by -0.5% in April as forecast after March’s positively revised 5.1% growth, but the Durables Excluding Transportation ecostat came in at 0.5% in April rather than the 0.3% expected. US Consumer Confidence data is out shortly and could offer the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates further support if favourable.
Greek PM Spurs Default Fears as Euro to US Dollar (EUR/USD), Euro to Pound Sterling (EUR/GBP) Exchange Rates Fall
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed as the situation in Greece continued to concern investors.
Swissquote market analyst Arnaud Masset commented: ‘In Europe, mounting uncertainty about Greece’s next payment to the IMF on June 5th adds pressure on the Single Currency as Alexis Tsipras, Greece’s PM, declared that his government would accept a sustainable deal “but not a humiliating” agreement, threatening to default on €1.6bn loan repayment due to the IMF in June. As a result, the fall of the Euro against the Dollar accelerates.’
The GBP/EUR currency pair has been able to advance on account of Greek jitters as the nation balances on the very precipice of financial collapse. Meanwhile, the GBP/USD exchange rate softened as upbeat inflation data from last week buoyed the US Dollar and offered support to those that believe a Federal Reserve rate hike could occur in the near future.
Friday’s Core US Consumer Price Index remained at 1.8% in April, rather than declining to 1.7% as forecast.
Earlier… The US economy has produced some weaker-than-forecast figures in the past few months and it’s put a cat amongst the pigeons as to whether it would be enough to deter the US Federal Reserve from increasing interest rates in the near future.
Weak US Economic Data Causes US Dollar (USD) Exchange Rate Softness and Re-evaluation for Fed Interest Rate Hikes
The short answer, is most likely yes. The FOMC minutes released last week saw the Fed move away from statements suggesting that a June rate hike lift-off could take place, instead looking to September and beyond.
The minutes read: ‘[Many officials] thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility.’
So could this week bring in some upbeat data which causes a hawkish Federal Reserve to emerge? It’s possible that Tuesday’s US Durable Goods Orders and US Consumer Confidence stats could print favourably and bolster the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates quite significantly. In addition, upbeat data could spark hopes that the recent poor string of ecostats were an anomaly.
UK and US Gross Domestic Product (GDP) Stats Forecast to Cause Major GBP/USD Exchange Rate Movement
However, Friday’s going to be the real test for USD/GBP and USD/EUR with the release of US Gross Domestic Product (GDP) ecostats. The first quarter figures could bolster the US Dollar substantially if favourable. It’s worth noting though, any unfavourable data at this point could pressure the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates dramatically lower.
The Pound Sterling will have a relatively quiet week by way of UK domestic data movement, until we reach Friday and the UK releases its own GDP figure. Additionally, the Pound Sterling exchange rate has also been influenced by rate hike speculation as investors attempt to fathom the Bank of England’s (BoE) timeline.
Last week saw the BoE release its latest minutes, in which two of the nine policymakers felt the decision on whether to hold interest rates was ‘finely balanced’.
Additionally, the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates could feel the impact of UK politics as Britain prepares to negotiate better deals with the EU ahead of a referendum to determine whether Britain will remain a part of the union.
Italian GDP will also surface in Friday’s European session which could be moderately influential for the Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates. However, the main source of Euro movement is likely to be the possibility of a Grexit as Greek negotiations continue.
Greek Government Optimistic Deal can be Struck by June Deadline – EUR Exchange Rate Sensitive
The Greek government made statements on Friday claiming that it was ‘optimistic’ a deal would be made by the end of May. Therefore, this week could be an extremely interesting one to watch for negotiations.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading at 1.5389, while the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4134.