As the week continued the Pound Sterling to Euro (GBP/EUR) exchange rate pared some of its previous gains despite the Euro struggling against several of its peers; the US Dollar largely held Tuesday’s advance off the back of brighter Federal Reserve interest rate hike expectations.
Pound Sterling (GBP) Exchange Rate Forecast to Trend in Narrow Range before UK GDP
The Pound gained on a number of peers on Tuesday after the Confederation of British Industry’s Reported Sales figure exceeded expectations. However, the GBP/EUR exchange rate moved away from a recent 2 ½ month high following the publication of better-than-expected German confidence data. The GBP/USD pairing was able to return to trending above 1.54, but with influential data in short supply further movement may be limited. Tomorrow’s first quarter growth report for the UK is likely to have a notable impact on Pound trading.
Euro (EUR) Exchange Rate Volatility Forecast as Greek Negotiations Continue, German Confidence Improves
Mixed comments from the Greek government regarding the likelihood of the nation defaulting on its next debt repayment to the International Monetary Fund (IMF) put the Euro under pressure on Wednesday. That being said, the common currency strengthened modestly against the Pound after German Consumer Confidence data revealed an unexpected increase in sentiment. Confidence in the Eurozone’s largest economy was shown to have risen to a more than 13-year high.
Federal Reserve Rate Hike Speculation Dictates US Dollar (USD) Exchange Rate Movement
Improved Federal Reserve interest rate hike bets gave the US Dollar a boost earlier in the week, and although Tuesday’s Markit Services PMI showed a decline, investors chose to fixate on the comparatively upbeat Durable Goods Orders and Confidence figures for the world’s largest economy. Despite the ‘Greenback’s generally bullish stance, the Pound was able to edge higher in response to comments issued by the Federal Reserve Vice Chairman. The remarks implied that rate hikes would be slowed by deterioration in global growth.
Australian Dollar (AUD) Exchange Rate Forecast to Continue Trending Lower
After sliding against the majority of its currency counterparts in response to the prospect of higher borrowing costs in the US, the ‘Aussie’ began Wednesday’s European session trending slightly lower against the Pound and trading in a tight range against the ‘Greenback’. A modest increase in the Westpac Leading Index and a steep -2.4% decline in domestic construction work failed to lend the Australian Dollar any support.
Prospect of Higher US Rates Weighs on New Zealand Dollar (NZD) Exchange Rate
The New Zealand Dollar mirrored its Australian counterpart overnight, sliding against rivals like the Pound, Euro and US Dollar following the release of some encouraging US ecostats. A 2.6% year-on-year increase in Chinese Industrial Profits had little impact on the ‘Kiwi’.
Canadian Dollar (CAD) Exchange Rate Fluctuations Forecast to Follow BOC Decision
With oil prices declining for a second day, the Canadian Dollar softened against several of its peers. Today’s Bank of Canada (BOC) interest rate decision could have an impact on Canadian Dollar trading, particularly if the central bank takes unexpected action – such as cutting interest rates further. As it stands, the BOC is expected to leave fiscal policy unchanged.
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