US Dollar Strength Sees Gold Prices Fall at Fastest Pace in 30 Months
A strengthening US Dollar has continued to push gold prices lower, with a 7.5% loss in the value of bullion, causing it to approach its lowest level since
February 2010. As the likelihood of a Fed rate hike continues to rise, investors are deserting gold, a non-interest paying asset. Palladium, Platinum and Silver have all also recorded significant drops.
With today’s UK data likely to provide little traction for Pound Sterling, Eurozone and US data will be key in determining the direction of the GBP/EUR and GBP/USD exchange rate.
GBP/EUR, GBP/USD Exchange Rate Forecast: Net Consumer Credit Down
Newly released figures show that UK Net Consumer Credit has unexpectedly fallen £100 million to £1.2 billion, while Net Lending Secured on Dwellings remained steady at £3.6 billion, instead of falling to £3.4 billion as predicted. Mortgage Approvals rose 0.6k in October, slightly less than the 0.9k forecast. The mixed data is likely to do little for Pound Sterling, with investors still focussed on the policies announced in George Osborne’s Autumn Statement.
While Osborne announced that the police budget would be protected and agreed not to make his controversial tax credit cuts, he has used the surprise uptick in the economy to cover the costs of these measures. If the UK economy fails to perform as forecast, Osborne will be forced to go back on his promises or increase borrowing to meet his commitments.
Pound Sterling’s only significant gains this morning are 0.3% against the Turkish Lira (TRY) and 0.8% against the Russian Ruble (RUB) as both countries feel the fallout of worsening political tensions after Turkey shot down a Russian military plane last week.
EUR/GBP Exchange Rate Soft Ahead of Key German Consumer Price Index
The Euro is currently trending down against most of the major currencies. Despite last week’s positive PMIs and assessment of the German business climate, Euro appetite could remain weak ahead of Thursday’s interest rate decision from the European Central Bank (ECB). ECB President Mario Draghi has previously suggested that additional stimulus could be required in the Eurozone, so investors will likely hold back until a decision upon the 0.05% interest rate has been reached.
European stocks have seen similar behaviour, with investors holding back ahead of the Thursday meeting. While Frankfurt added 0.8% to the DAX index and Paris added 0.6%, London’s FTSE 100 lost 0.3%.
The Euro is currently trending narrowly in the positive range against Pound Sterling and has slipped -0.1% against the US Dollar. The EUR/GBP exchange rate is currently trading in the region of 0.7048.
USD/GBP Exchange Rate Trending at Highest Level Since April Following US Data Glut
The US Dollar has started today’s London session trending up against the majority of currencies as it continues to be strengthened by the results of last week’s data glut. There has been a delayed reaction to the key US data released during the first half of last week, with the Thanksgiving holiday on Thursday dampening trade before the weekend.
Key among the data releases were Gross Domestic Product figures showing that growth in the US economy accelerated to 2.1% in the third quarter, up from 1.5%. Wednesday saw a leap in Durable Goods Orders, rising from -0.8% to 3.0%. Poor performances in other areas, such as an unexpected 8.7 point drop in the Consumer Confidence index for November to 90.4, kept the ‘Buck’ (USD) from extending its bullish lead on Pound Sterling.
The US Dollar has started this morning trending up 0.2% against Pound Sterling and 0.1% against the Euro, with the GBP-USD exchange rate trading in the region of 0.6663.
Pound Sterling to Euro, USD Exchange Rate Forecast: Pound Likely to Stay Weak
With Pound Sterling already on the decline, a predicted rise in the German Consumer Price Index to 0.4% will push the British asset down further. The same could happen later when US Pending Home Sales figures are announced, as these are expected to show a 2.0% rise to 4.5%.
The Pound Sterling to Euro (GBP/EUR) exchange rate is trending between 1.4172 and 1.4219.
The Pound Sterling to USD (GBP/USD) exchange rate is trading between 1.4998 and 1.5050.