US Dollar Surges as Consumer Confidence Jumps Up
American consumer sentiment is becoming increasingly positive, with recently released survey data showing the confidence index has risen from 92.6 to 96.5, a much larger change than the 0.9 point increase forecast. While confidence is still marginally under the benchmark 100 level, the Consumer Confidence survey shows that sentiment continues to become more positive.
As a result the US Dollar has begun a bullish charge, gaining 0.6% on the Euro and Pound Sterling.
Pound Sterling Plummets as Met Office Issues More Severe Flood Warnings
Storm Frank could do even more damage, having already caused flooding in Yorkshire, Greater Manchester, Lancashire and Cumbria. Pound Sterling exchange rates have plummeted following the news that the storm, which has already cost the UK economy an estimated £6 billion, could be a major risk to more communities in the north of England. The Met Office has already issued nine severe flood warnings, which means there is a danger to life, in England and Wales.
The expected cost to the UK economy of flooding in the North of England over the Christmas period has seen Pound Sterling slide against the Euro and the US Dollar today. Both the Euro and US Dollar are experiencing mixed fortunes against the other major currencies, however.
GBP/EUR Exchange Rate Forecast: Insurance Firm Predicts Flooding Will Cost UK Economy £5.8 Billion
Heavy downpours over the Christmas period have led to several rivers in the North of England bursting their banks, causing severe flooding in parts of Greater Manchester, Lancashire, Yorkshire and Cumbria.
5,500 homes in Scotland have been left without power, with over 60 flood warnings issued, along with 46 in England and Wales. A bridge near the North Yorkshire town of Tadcaster has collapsed, while Northern Ireland has been experiencing power cuts, delayed flights and roads blocked by fallen trees.
Based on the economic impact of previous floods, including those during the summer of 2007, accountancy firm KPMG has calculated that the long term economic cost to the UK could be as high as £5.8 billion.
As well as the initial damage, businesses will lose money from having to close, agricultural output will suffer and consumer spending will drop as people are unable to go shopping or travel. While another accountancy firm, PwC, put the costs at a much-less-severe £1.3 billion, economists are anticipating a -0.2% hit to UK GDP as a result of the flooding, with IHS Economics estimating even higher costs.
David Cameron has been heckled by flood victims, with the current disaster causing conflict over claims that Government spending on flood defences is higher in the south, although the PM has pledged to increase spending – something that Chancellor George Osborne is unlikely to react positively to as he struggles to keep borrowing on track.
Pound Sterling is down -0.2% against the Euro and the US Dollar.
The Euro has been strengthened slightly as trader fears over the likelihood of an anti-austerity coalition taking power in Spain becomes less likely. The ruling conservative party failed to secure a majority at the recent elections and with the Socialist party ruling out agreements with both the Prime Minister’s party and the third place, anti-austerity Pomedos, the chances are that another round of elections will be held in early 2016.
GBP/USD Exchange Rate News: US Economic Dominance to Continue Longer than Expected
With the growth in China slowing this year, predictions of when the US will lose its economic dominance have been pushed back to 2031, giving America another 6 years as the world’s largest economy. The predictions, drawn from a study by the Centre for Economics and Business Research (Cebr), based in the UK, anticipate that the US will slip to second place in 2031 with a GDP of $33.66 trillion, with China’s GDP rising to $35.26 trillion.
The report also anticipates a drop in ranking for the UK, which will slide from fifth to sixth place as India jumps to the third spot.
Pound Sterling to Euro, US Dollar Exchange Rate Forecasts
Data will remain sparse until the year-end, with the only releases for the UK or the Eurozone due tomorrow. The US sees several important releases over the next two days. The only data on Friday is the Chinese Manufacturing PMI, which could still impact exchange rates slightly if the result adds to or lessens fears of a global economic slowdown.
GBP/EUR, GBP/USD Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending around 1.3542, while the Euro to Pound Sterling exchange rate (EUR/GBP) is trading in the region of 0.7383.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending around 1.4860, while the US Dollar to Pound Sterling exchange rate (USD/GBP) is trading in the region of 0.6729.