UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.2% on Thursday morning, whilst the Pound to US Dollar (GBP/USD) exchange rate advanced by 0.4%.
In response to British fourth-quarter Gross Domestic Product data, which met with estimates of 0.5% growth on the quarter and 1.9% on the year, the Pound advanced against nearly all of its most traded currency rivals.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3090.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4292.
Yesterday…
Pound Sterling to Euro (GBP/EUR) Conversion Rate Forecast to Hold Losses on German Consumer Confidence
The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.6% on Wednesday afternoon.
In response to less-than-ideal domestic data the Pound Sterling softened versus nearly all of its currency rivals today. This effectively pared recent Sterling gains with many predicting further losses to come amid concerns regarding a dovish Bank of England (BoE) and ‘Brexit’ uncertainty. January’s Nationwide House Prices came in at 4.4% on the year, missing the median market forecast 4.7% growth. On a monthly basis, January’s Nationwide House Prices came in at 0.3% which was well below the market consensus of 0.6%. In addition, December’s BBA Loans for House Purchase failed to meet with expectations of a rise from 44533 to 45500, with the actual result dropping to 43975.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3126.
Meanwhile, the Euro advanced versus most of its major peers thanks to positive economic data. February’s German GfK Consumer Confidence Survey was forecast to drop from 9.4 to 9.3, but the actual result held at 9.4. Additionally, January’s French Consumer Confidence unexpectedly advanced from 96 to 97. Slightly lower-than-forecast Italian Business Confidence in January was offset by rising Italian Consumer Confidence in the same month.
In response to Germany’s Consumer Confidence reading, analysts at GfK stated; ‘Despite a number of risks, including the threat of terrorist attacks and the refugee crisis, consumers still believe that the German economy will continue to grow modestly in the next few months.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Soften ahead of FOMC Interest Rate Decision
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.5% on Wednesday afternoon.
In response to Nationwide’s housing data, Nationwide’s Chief Economist stated; ‘(With) interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead,’ stated Robert Gardner. ‘The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4273.
As traders await the Federal Open Market Committee (FOMC) interest rate decision, the US Dollar edged higher versus most of its peers. Whilst many fear that external risks from the slowing global economic outlook will cause policymakers to hold rates, the domestic health of the economy continues to improve with solid labour market conditions supporting growth. Many analysts predict that the Fed will hold rates tonight but look to hike once again in March.
Derek Halpenny, European Head of GMR at MUFG, stated; ‘That reference to a possible rate increase in March certainly will not be in this evening’s FOMC statement and more likely will be a reference to “monitoring developments abroad”, which was included in the September FOMC statement following the financial market turmoil after the devaluation of the Renminbi in August.’
Pound Sterling Forecast: Fourth-Quarter GDP in Focus
Although tonight’s FOMC interest rate decision has the potential to provoke significant market volatility during the North-American session, those invested in the British Pound will be looking ahead to Thursday’s fourth-quarter Gross Domestic Product. The quarterly reading is predicted to rise by 0.5%, which would better the previous figure, but the annual measure is forecast at 1.9% growth which is lower than the 2.1% registered previously.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3075 to 1.3220.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.4229 to 1.4355 during Wednesday’s European session.