The Pound Sterling to Euro (GBP/EUR) exchange rate fell in Thursday’s trading after German GfK Consumer Confidence rose from 9.7 to 10.0, while the Pound Sterling to US Dollar (GBP/USD) exchange rate climbed on account of broad US Dollar softness.
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate continued to trend lower in Wednesday’s European session while the Pound Sterling to US Dollar (EUR/USD) exchange rate advanced on weaker-than-forecast US Durable Goods Orders and Federal Reserve statements.
Fed official Charles Evans suggested that interest rate hikes shouldn’t take place in 2015, stating that higher inflation was needed before increases to borrowing costs could be implemented.
Meanwhile, Durable Goods Orders contracted by -1.4% in February, despite forecasts for 0.2% growth.
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate fell in the first half of Wednesday’s European trading while the Pound Sterling to US Dollar (GBP/USD) exchange rate gained ahead of US Durable Goods Orders.
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate continued to soften in Tuesday’s European trading after German Services and Manufacturing Purchasing Managers Indexes (PMI) printed more favourably than forecast, while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in a narrow range ahead of UK inflation figures.
The German Composite Index rose from 53.8 to 55.3 in March.
Earlier… The The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates took a dive in Monday’s European trading as UK general election fears pushed the currency pair to trend lower.
UPDATE: The Pound continued to soften in Monday’s European session after CBI Trends Total Orders sank lower than forecast to hit 0 in March from 10–a distinct difference from the forecast 9.
Additionally, US Existing Home Sales rebounded softly in February by only 1.2% while economists had predicted a stronger 2.0%. The Chicago Federal Reserve National Activity Index came in at -0.11 in February after January’s -0.10.
ECB President Mario Draghi also spoke during Monday’s trading which saw the central banker suggest that weaker oil prices and a softer Euro are helping the Eurozone’s economic recovery.
Draghi commeted: ‘Growth is gaining momentum, The basis for the economic recovery in the Euro area has clearly strengthened. This is due to in particular the fall in oil prices, the gradual firming of external demand, easy financing conditions driven by our accommodative monetary policy, and the depreciation of the Euro.’
Earlier… The UK general election has the potential to significantly pressure the Pound Sterling exchange rate into weaker territory, with the very real threat of a political shakeup on the horizon. If confidence falls around the election, UK economic growth could stutter—an event that would naturally push the Pound Sterling exchange rate lower.
Strategist Daragh Maher commented: ‘All paths lead to a degree of Sterling weakness. Traditionally the Pound does better if the Conservatives are expected to win and does worse if Labour are set to win. That doesn’t hold so closely this time around.’
General Election Uncertainty to Weigh on GBP/EUR, GBP/USD
However, last year saw controversial political party UKIP win two seats in parliament, an event that put a cat amongst the pigeons and signalled the possibility of political change. However, many experts are forecasting a hung parliament with no party able to gain the majority of votes.
If a hung parliament does occur and UK economic growth falters, the Bank of England (BoE) may be forced to hold down interest rates for longer. In addition, the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates could significantly drop as investor sentiment wanes.
Barclays strategist Hamish Pepper commented: ‘Foreign exchange represents the cleanest expression of UK election risk.’
Meanwhile, the GBP/EUR exchange rate could fluctuate significantly on Monday with European Central Bank (ECB) officials expected to speak throughout the day.
ECB representative Benoit Coeure is scheduled to speak on Monday morning, while ECB President Mario Draghi is forecast to impact Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) movement this afternoon. Additionally, Eurozone Consumer Confidence is also out later in Monday’s trading.
Another factor weighing on the Euro is negotiations between Greece and its creditors as the nation attempts to gain a better austerity deal. Monday evening will see German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras meet in Berlin to discuss the matter.
US Dollar to Pound Sterling (USD/GBP), US Dollar to Euro (USD/EUR) Exchange Rates Forecast to Fluctuate on Federal Reserve Rate Hike Speculation
Meanwhile, the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates have remained bullish in recent months as investors’ price in the possibility of a US Federal Reserve rate hike.
However, despite a language change from the Federal Open Market Committee (FOMC) last week, not all Fed members believe a rate hike is on the horizon in the near future.
Chicago Federal Reserve President Charles Evans commented that a delay in hiking interest rates would be unlikely to hinder the Fed’s ability to keep inflation in check—Evans has previously stated he’d like to keep interest rates on hold until 2016.
Evans stated: ‘I believe we would be well served by being cautious and be in no hurry to raise interest rates.’
Pound Sterling to Euro (GBP/EUR) and US Dollar (GBP/USD) Exchange Rate Forecast
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates could feel the effect of UK CBI Trends Total Orders and CBI Trends Selling Prices due for publication later in Monday’s trading.
Meanwhile, US Existing Home Sales and Chicago Federal Reserve National Activity Index could also impact the USD/EUR and USD/GBP currency pairs.
San Francisco Federal Reserve President John Williams and Federal Reserve Vice Chairman Stanley Fischer are also scheduled to speak on Monday.
The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3756; the Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4875.
