The Pound Sterling (GBP) has lessened its losses to -0.2% against the Euro (GBP/EUR) and a minor dip against the US Dollar (GBP/USD) today, a sign that yesterday’s events may finally be losing their influence.
Potential for Turbulent Times ahead as UNI Global Union’s Jennings Forecasts Financial Crash
While the Pound Sterling (GBP) is ostensibly now recovering from the devastating blow dealt yesterday by Carney, there are signs from Davos that far greater tests are in store for the UK and global economies.
Phillip Jennings, UNI Global Union Secretary, has bluntly stated: ‘We are heading for a crash…China is slowing and the impact will ripple out across the developing economy’.
The near-future is likely to bring a great deal of movement for the Pound Sterling (GBP), although at present only upwards progress can be considered an improvement for the current losses of -0.7% against the Euro (GBP/EUR) and -0.3% against the US Dollar (GBP/USD).
Euro (EUR) Investors Unfazed by Recent German Economic Shortfalls
The most recent movement for the Euro (EUR) has been in an almost universally positive direction, although this morning’s German Producer Prices for December have let down investors by falling from -0.2% to -0.5% on the month and from -2.5% to -2.3% on the year.
The Pound Sterling (GBP) has recorded losses of -0.7% against the Euro (GBP/EUR) and -0.6% against the US Dollar (GBP/USD) today as the fallout of Bank of England (BoE) Governor Mark Carney’s speech has continued to have a prolonged negative impact on the Pound.
The focal point for economists at present has been identifying all of the unmentioned causes behind Carney’s ‘no hike’ mentality, as well as speculating on when the coveted UK interest rate hike will finally arrive.
Charged to Store Money? BoE’s Newest Member Presents Radical Solution for Previous Financial Crisis
Although he has only just arrived on the BoE’s Monetary Policy Committee (MPC), Gertjan Vlieghe has already courted controversy by claiming that by putting UK interest rates into a negative range during the late 2000s financial crash, the country would have emerged in a more stable condition than it is presently.
While this thought-provoking statement was made in response to a previous financial crisis, it is unlikely to have calmed investors who remain on edge about when and by how much the next UK Interest Rate Decision will be.
The Pound Sterling (GBP) has deteriorated in value greatly today, following on from Bank of England (BoE) Governor Mark Carney’s first economic outlook speech of the year.
Dubious Target for UK Rate Hike Fails to Console GBP Investors
In essence, Carney ruled out any form of UK interest rate hike in the near future, citing the Chinese slowdown, the crude oil catastrophe and poor UK sector results as the main reasons behind this attitude.
Although Carney offered the saving grace of an interest rate increase occurring before UK inflation hits 2%, few investors bought it and instead the Pound (GBP) has bombed since earlier.
The Pound Sterling to Euro (GBP/EUR) and US Dollar (GBP/USD) exchange rates have both risen today following the announcement of the UK’s supportive Inflation Rate results for December.
GBP/EUR, GBP/USD Exchange Rate News: Sterling Rises with Best Inflation Score in 12 Months
Pound Sterling (GBP) has advanced against most of its economic rivals this morning in a repeat performance from yesterday, with the recent UK Inflation Rate figures for December providing the impetus for this favourable performance.
Against forecasts in two of three cases, the CPI results have seen gains from 0.1% to 0.2% on the year, an increase from 1.2% to 1.4% for the Core outcome and base monthly growth from 0% to 0.1%.
While some economists do not believe this minor improvement will be enough for an interest rate hike in 2016, it is nonetheless the best showing of inflation for the UK since January 2015.
The Pound has made gains of 0.5% against the US Dollar (GBP/USD), 0.6% against the Euro (GBP/EUR), 0.7% against the Swiss Franc (GBP/CHF) and 0.9% against the Japanese Yen (GBP/JPY) today.
Euro (EUR) Soft on Investor Uncertainty, US Dollar (USD) Performance Mixed This Morning
The Euro (EUR) has given an encore performance of yesterday so far today, having tanked against virtually all of the competition.
This immobility comes after the German ZEW Survey of Economic Sentiment for January fell from 16.1 to 10.6; a better result than expected but still a marked decline in confidence. Elsewhere, Eurozone inflation in December rose marginally on previous printings.
The Euro has seen declines of -0.2% against the US Dollar (EUR/USD), -0.6% against Pound Sterling (EUR/GBP) and -1.5% against the South African Rand (EUR/ZAR).
The US Dollar (USD) has so far failed to break away from the previous day’s movement, where losses and gains were seen in roughly equal measure.
Notable movements for the US currency have included rises of 0.2% against the Euro (USD/EUR) and 0.5% against the Japanese Yen (USD/JPY) but losses of -0.9% against the Australian Dollar (USD/AUD) and -1.4% against the South African Rand (USD/ZAR).
GBP, EUR, USD Exchange Rate Forecast: Carney Speech Looms along with Later US Housing Data
Although all of the high-impact Eurozone economic publications of the day are now out, there is still news from the UK and the US with the potential to generate a significant level of movement for both the Pound and US Dollar.
The UK’s event will come first in the form of a speech from Bank of England (BoE) Governor Mark Carney, who is due to deliver his first keynote speech of 2016 at noon. Unlike most other speeches from Carney, expectations are that the policymaker will actually give a direct statement on the BoE’s Interest Rate Decisions. Unfortunately, given the present conditions of the UK and global economies, it seems that a hawkish, hike-based outlook is out of the question.
From the US will come the NAHB Housing Market Index for January, which is expected to remain at 61 points.
Looking further ahead, tomorrow morning will see the release of the German Producer Prices for December, which were pessimistically forecast to remain negative as of writing.
Current GBP, EUR, USD Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3161, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7598, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.4310, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.6989, the Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.0872 and the US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.9200 today.