British Pound (GBP) Conversion Rate Predicted to Hold Gains against the Common Currency (EUR) After Eurozone Investor Confidence Misses Estimates
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.5% on Monday morning.
Despite a complete absence of British economic data to provoke volatility, the Pound strengthened versus its major peers during Monday’s European session. The appreciation is partly the result of fears that last week’s depreciation was overdone. Although the UK Construction, Manufacturing and Services PMIs all failed to meet with market expectations, the data showed that each sector still posted growth in August.
Additional Sterling gains on Monday can be linked to improvement in Britain’s top share index, which rose 0.9% at 08:00 (GMT). The FTSE 100 advanced after the mining and commodities trading firm Glencore announced a plan to cut a significant amount of debt in the wake of weakening metals prices. ‘This significantly improves the balance sheet of the company (and) it comfortably places Glencore in investment grade territory by rating agencies under most commodity scenarios,’ stated Citi analysts. ‘(It) gives the company flexibility to weather any downcycle and is likely to remove the markets concern on the downside.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3672.
The shared currency, meanwhile, is holding a comparatively strong position versus most of its major rivals. With much uncertainty regarding the fallout from China’s economic difficulties, the Euro continues to find support thanks to its safe-haven status, although mixed results from domestic data publications on Monday weighed on Euro gains.
On the year, July’s German Industrial Production advanced by 0.5% which was better than the median market projection of 0.3% growth. On the month, however, German Industrial Production advanced by just 0.7%; missing the market consensus of 1.1%. September’s Eurozone Investor Confidence also failed to impress and weighed on demand for the single currency. Investor Confidence was predicted to fall from 18.4 to 16.0, but the actual result was a drop to 13.6.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3588 to 1.3680 during Monday’s European session.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Surge on Shanghai Composite Index
The Pound Sterling to US Dollar (GBP/USD) exchange rate strengthened by around 0.6% on Monday morning.
Looking ahead, this week is relatively sparse in terms of influential British data publications. With that being said, Friday’s Bank of England (BoE) Inflation Target will be of high importance. With a lack of global inflationary pressures amid tumbling commodity prices, many experts project that the British central bank will reduce inflation expectations for the next 12 months. The BoE interest rate decision is also of importance, although no policy changes are expected at this time. August’s NIESR Gross Domestic Product Estimate may also cause volatility for the UK asset.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5258.
Given that US markets closed on Monday to celebrate Labour Day, US Dollar trade has been comparatively subdued. With a complete absence of domestic data, the US asset will be subject to changes in market sentiment. However, demand for safe-haven assets may not be enough to encourage US Dollar gains with ongoing concerns regarding China’s equity market.
After a period of calm with China’s national holiday causing markets to close, the Shanghai Composite Index dropped by 2.5% after the Asian session opened on Monday. This renewed fears that Beijing’s extensive intervention is not having the desired effect. This is in direct contrast to news from the G20 Summit which showed officials were confident that the worst was behind them with regard to China’s struggles. All this could weigh on demand for the US asset as traders fear the fallout from China’s economic struggles will cause the Federal Open Market Committee (FOMC) to delay a benchmark rate hike until 2016.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5167 to 1.5270 during Monday’s European session.
