During Friday’s European session, The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.36%. The Pound Sterling to US Dollar (GBP/USD) exchange rate tumbled by over 1.0%.
Although British data was relatively positive on Friday, the Pound declined versus many of its major peers. The depreciation can be attributed to mounting fears regarding the referendum on Britain’s membership to the European Union.
The shared currency fluctuated versus many of its major rivals as positive domestic data was somewhat offset by geopolitical tensions in Greece. Fears that the Hellenic nation will fail to secure financial aid in time to make loan repayments is weighing on investor confidence.
The US Dollar advanced across the board in response to inflation data meeting with forecast figures. Given that the US asset has softened considerably after a succession of disappointing data publications, the positive inflation data has seen greater-than-expected US Dollar appreciation.
Pound Sterling (GBP) Exchange Rate Forecast to Fluctuate on EU Talks
With mounting fears that Prime Minister David Cameron’s attempt to make the case for a change to the EU relationship will fail, uncertainty is weighing on trader confidence. With the EU Commission President due to meet with Cameron on Monday, investors will be hoping the talks are successful in order to deter the British public from a Brexit.
Over the coming week domestic data is a little thin on the ground. However, the preliminary figure for first-quarter British growth is likely to provoke volatility for the UK asset. In addition; CBI Reported Sales, BBA Loans for House Purchase, GfK Consumer Confidence Survey and Nationwide House Prices will be of interest to those trading with the British asset.
Euro (EUR) Exchange Rate Forecast to Fluctuate on Geopolitical Tensions
With the situation in Greece dominating trader focus, domestic data is unlikely to have a significant impact. With that being said, however, the German Import Price Index, Eurozone Economic Confidence, Eurozone Business Climate Indicator, Eurozone Industrial Confidence, Eurozone Services Confidence, Eurozone Consumer Confidence, Eurozone M3 and Italian Gross Domestic Product may be of interest to those trading with the common currency.
Should Greece fail to make significant progress towards bridging the gaps and making necessary economic reforms, the Eurogroup will continue to deny Athens bailout funds. Should Greece default on June’s IMF repayment, the shared currency is likely to soften considerably.
US Dollar (USD) Exchange Rate Forecast to Soften on Domestic Data
Given that US data has produced mostly disappointing results of late, there is a reasonable potential for the coming weeks data to print softly. Should this be the case, the US Dollar will tumble versus its major rivals. This is particularly true when you consider there will be several influential data publications due for release.
The Gross Domestic Price Index, Personal Consumption, Annualised Gross Domestic Product, Consumer Confidence and Durable Goods Orders will all be of interest to those invested in the US asset. Should any of these publications produce a particularly poor result, the ‘Greenback’ (USD) will plummet across the board.
In addition to the domestic data already mentioned above; House Price Index, New Home Sales, Mortgage Applications, Composite PMI, Services PMI, Initial Jobless Claims, Continuing Claims, Pending Home Sales, Core Personal Consumption Expenditure, University of Michigan Confidence and Baker Hughes US Rig Count also have the potential to provoke Dollar changes.
During Friday’s European session, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3958 – 1.4094.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the parameters of 1.5483 – 1.5690.
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