The Pound Sterling (GBP) has hit -1.7% against the Euro (GBP/EUR) and -0.9% against the US Dollar (GBP/USD) today, with the most recent high-impact US data doing little to discourage investors in the US currency enough for a Sterling uptrend.
UoM’s Curtin Warns against Complacency over Latest US Confidence Score
While the earlier US December Advance Retail Sales figure fell from 0.1% to -0.1%, the more recent University of Michigan Confidence score for January has pulled the ‘Buck’ (USD) out of the fire by showing an unexpected increase from 92.6 to 93.3.
According to Survey Director Richard Curtin, however, if the US economy is not continually supported by the ‘extraordinarily low inflation rate’, confidence could drop sharply without much warning from forecasts.
Although the damaging UK data of the day was out in the morning, it nonetheless appears to be having a continually negative effect on the value of the Pound Sterling (GBP).
Over a Third Likelihood of UK Exiting EU may have Rattled Investors Today
In addition to the Pound (GBP) being damaged by the earlier Construction Output results, it may have also been pushed down further by the recent figure of 35% given by Royal Bank of Scotland Chairman Howard Davies, with regard to the UK’s chances of exiting the European Union after the referendum vote.
It must be stressed, however, that in Davies’ own words: ‘it’s a very volatile environment’.
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates have both crumbled today, mainly on account of the morning’s UK Construction data proving highly disappointing.
GBP/EUR, GBP/USD Exchange Rate News: UK Currency set to End Week on a Low Note
Today has hardly been beneficial to the value of the Pound Sterling (GBP) so far and given that no more UK economic publications are scheduled for today, this poor condition is likely to persist into the weekend.
The damaging results in question were the monthly and annual Construction Output figures for November. Output fell from 0.2% to -0.5% on the month and similarly dropped from 1% to -1.1% on the year. This represents a second consecutive day of disappointment for UK investors, who have been given a double helping of pessimism to weather.
Among the Pound’s losses today have been -0.4% against the US Dollar (GBP/USD) and -0.9% against the Euro (GBP/EUR), although a gain of 1.2% against the Australian Dollar (GBP/AUD) has also been recorded.
Euro Bounces on Possible ECB ‘Light Touch’, US Dollar (USD) Mixed ahead of Sales Stats
The Euro (EUR) has rallied against almost all of its rivals today, with advances of 2.3% against the Australian Dollar (EUR/AUD), 0.9% against the Pound Sterling (EUR/GBP), 0.5% against the US Dollar (EUR/USD) and 1.8% against the South African Rand (EUR/ZAR) being seen.
Investors are likely confident in the current value of the Euro due to recent speculation that the European Central Bank (ECB) may be taking a ‘hands off’ approach to policy measures in the immediate weeks, something that comes as a welcome change to previous fine tuning from the central bank.
The US Dollar’s (USD) movement has been less coherent today, with losses and gains being present in equal measure. Among these have been falls of -0.4% against the Euro (USD/EUR) and -0.7% against the Japanese Yen (USD/JPY) but rises of 0.4% against the Pound Sterling (USD/GBP) and 1.3% against the New Zealand Dollar (USD/NZD).
Most recently, the price of crude oil per barrel has dipped below the $30 mark, something that has severely concerned ‘Buck’ investors.
GBP, EUR, USD Exchange Rate Forecast: US Data This Afternoon, ECB Decision Next Week
For the rest of the day, the only movement in the trinity is likely to come from the US, as the next high-impact UK and Eurozone releases aren’t due until Monday at the earliest.
This afternoon will see the release of the pessimistically forecast US Advance Retail Sales results for December, along with the University of Michigan Confidence score for January. At the time of writing, forecasts were for a decline in the high-impact Retail Sales result from 0.2% to -0.1%, although the Confidence score had a repeat prediction of the previous 92.6 figure.
While this week has been dominated by the sheer number of impactful US economic publications, the week to come will see a more even spread of data among the three regions.
Tuesday will bring both the UK CPI for December and the German ZEW Survey of Economic Sentiment for January, while the US Inflation Rate stats are due on Wednesday. Current forecasts have gains in store for the two main CPI fields.
Rounding off the week’s impactful releases will be Thursday’s ECB Interest Rate Decision, with the benchmark rate expected to remain at 0.05% at the time of writing.
Current GBP, EUR, USD Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3178, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7590, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.4368, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.6960, the Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 0.7590 and the US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.9174 today.