The Pound Sterling to Euro (GBP/EUR), Pound Sterling to Canadian Dollar (GBP/CAD) and Pound Sterling to US Dollar (GBP/USD) exchange rates all declined in Thursday’s European trading after Halifax House Prices slipped from 8.3% to 8.1% in the three months through March and ahead of the Bank of England’s (BoE) interest rate decision.
UK Trade Balance data is also expected shortly in Wednesday’s trading which could offer some moderate influence to the British currency.
Earlier… The Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates were all trading higher in Wednesday’s European session after UK New Car Registrations recorded the best March ecostat on record.
Car sales rose by 492,774 across the country, marking not only the best March figure to date, but also the most upbeat number since the 1999 change to biannual plates.
Chief executive of the Society of Motor Manufacturers Mike Hawes commented: ‘We expect a more stable market over the year ahead. But the fundamentals are still there: there’s still economic confidence, there’s still relatively low interest rates which makes for cheap finance packages… and there’s lots of new technology in the cars.’
‘It must be said, this can’t go on forever.’
However, looking at the UK’s recent upbeat economic data and overall robust recovery, the British currency may be able to strengthen on the back of central bank speculation.
After all, with an apparent slowdown in US data and growth of late, it’s highly possible that the Bank of England (BoE) could be the first to hike interest rates out of the Group of Seven (G7) developed nations.
Furthermore, if the Conservative party remain in power at the UK general election in May, the central bank may be inclined to increase borrowing costs earlier as the upset economic sentiment remains minimal than a full on political shakeup.
However, in the run up to the event, the Pound Sterling to Euro (GBP/EUR), Pound Sterling to Canadian Dollar (GBP/CAD) and Pound Sterling to US Dollar (GBP/USD) exchange rates could all be extremely vulnerable to speculation and the possibility of a hung parliament.
US Data Signals Slowdown – US Dollar (USD) Exchange Rate Softens. Will the Fed Hike Rates?
Last week was a massive disappointment for the US economy when the eagerly anticipated US Change in Non-Farm Payrolls ecostat registered only 126K rather than the forecast 247K.
The event was devastating for the US Dollar to Euro (USD/EUR), US Dollar to Canadian Dollar (GBP/CAD) and US Dollar to Pound Sterling (USD/GBP) exchange rates as well as for many traders who were betting on a Federal Reserve interest rate hike taking place in the next few months.
HSBC representative James Steel commented: ‘A weaker jobs report could push back expectations for a US interest rate hike, which may support bullion.’
Monday saw further disappointment when the US ISM Non-Manufacturing Composite fell in line with forecasts from 56.9 to 56.5 in March.
Wednesday’s expected to be a major day for the US Dollar exchange rate with the release of the Federal Reserve’s most recent meeting minutes. The Federal Open Market Committee (FOMC) record from the March 17th-18th summit could cause US Dollar movement if any hawkish or dovish tones were used.
However, it’s important to note that the meeting took place before the weak payrolls data and therefore if policymakers were hawkish, they may be slightly deterred from being as brazen in the wake of weaker ecostats.
Meanwhile, the Canadian Dollar has fallen dramatically in recent months as the price of Canada’s largest export, crude oil, took a tumble. However, Tuesday’s North American session recorded US oil prices at a 2015 high of $53.98 for delivery in May.
Oil production reached a massive 42-year high in March and with the prospect of an Iran deal in the near future, the price of oil looks as if it may continue to trend lower.
Analyst Gene McGillan commented: ‘The question is going to become, “Did we really see the tide turning as far as production and demand in the past couple of weeks?” It seems like the buyers have returned.’
Iran has been attempting to strike a nuclear deal with six world powers—a move that could see export sanctions loosened and the introduction of more oil into the global market glut.
Euro Exchange Rate (EUR/GBP, EUR/USD, EUR/CAD) Sensitive to Greek Negotiations
Meanwhile, eyes have been following Greece this week in an attempt to gauge if the meeting between Russian President Vladimir Putin and Greek Prime Minister Alexis Tsipras would result in a financial aid deal.
— Alexis Tsipras (@tsipras_eu) April 8, 2015
The May meeting, which is scheduled to take place this afternoon, was brought forward in what some suggested was an attempt to forge a deal if Eurozone talks failed to deliver.
— Alexis Tsipras (@tsipras_eu) April 7, 2015
However, Wednesday saw one Greek government official deny these claims stating: ‘We have not asked for financial aid. We want to solve our issues of debt within the Eurozone. Greece knows what to do within the EU framework but every country also has the sovereign right to look after and improve its bilateral relations.’
— Alexis Tsipras (@tsipras_eu) April 8, 2015
Additionally, German Factory Orders declined in February by -0.9% rather than recording the +1.5% growth forecast. The annual figure was therefore dragged down from -0.3% to -1.3%.
Eurozone Retail Sales also declined from 3.2% to 3.0% in February on the year.
A silver lining was offered in the form of the German Retail Purchasing Managers Index (PMI) which rose from 51.5 to 53.0 in March. The Eurozone Retail PMI hit 48.6 from 46.4 and was largely bolstered by Germany’s upbeat ecostat.
The Euro to US Dollar (EUR/USD), Euro to Canadian Dollar (EUR/CAD) and Euro to Pound Sterling (EUR/GBP) exchange rates are all likely to fluctuate on any developments between Greece and Russia today.
Pound Sterling Exchange Rate Forecast: GBP/USD, GBP/EUR, GBP/CAD
US Federal Reserve officials are scheduled to speak throughout Wednesday’s session, which could impact the US Dollar significantly, while Crude Oil Inventories could damage the Canadian Dollar in North American trading.
Meanwhile, the Pound could experience movement on Thursday with Trade Balance stats released, as well as the latest Bank of England interest rate announcement.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is reaching 1.8532. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4687; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3819.