The British Pound to Euro (GBP/EUR) continued to trend higher in the second half of Wednesday’s session while the British Pound to US Dollar (GBP/USD) and British Pound to Canadian Dollar (GBP/CAD) exchange rates fell on US Federal Reserve rate speculation.
The British Pound to Euro (GBP/EUR) exchange rate recorded gains in Tuesday’s European session, while the British Pound to US Dollar (GBP/USD) and British Pound to Canadian Dollar (GBP/CAD) exchange rates softened as the Federal Reserve took a hawkish tone on the topic of interest rate hikes.
Dallas Fed President Richard Fisher suggested that a delay in rate hikes could cause the US economy to dip into recession.
Strategist Todd Elmer commented: ‘If the strong data flow keeps up, the market may shift its view toward earlier tightening by the Fed.’
Earlier… The British Pound to Euro (GBP/EUR), British Pound to US Dollar (GBP/USD) and British Pound to Canadian Dollar (GBP/CAD) exchange rates remained bullish toward the close of Monday’s European session on hopes for a Bank of England (BoE) rate hike in the near future.
However, Canadian data did little to support the ‘Loonie’ exchange rate when Canadian Housing Starts slipped in February. The ecostat recorded a below forecast 156.3K rather than the 179.0K economists had predicted after January’s 187.0K rise.
Earlier… The British Pound to Euro (GBP/EUR), British Pound to US Dollar (GBP/USD) and British Pound to Canadian Dollar (GBP/CAD) exchange rates were all trending higher mid-way through Monday’s European session as investors forecast Bank of England (BoE) interest rate hikes this year.
The Bank of England maintained interest rates at 0.50% last week for the seventh year running and industry experts predict we won’t see the 0.50% benchmark carried into an eighth year. However, with the UK’s May general election looming, the Bank of England is unlikely to make any major changes in the near future.
Economist Daniel Vernazza commented: ‘They’re in no rush to raise rates with inflation so far below target. Once a government is formed, the uncertainty from the election won’t be an issue, and strong wage growth will support a rate increase. Our forecast is for the first move to come in August.’
Meanwhile, the Euro held its ground against a host of other currency majors when Sentix’s Investor Sentiment index rose to a seven-year high. The index reached 18.6 in March from February’s 12.4, flying higher than economists’ 15.0 forecasts.
The European Central Bank (ECB) embarked on a period of quantitative easing (QE) on Monday in the central bank’s latest attempt to stimulate growth in the 19-nation area. Amid a backdrop of Greek negotiations, the Euro has remained quite resilient with so much uncertainty threatening to impact the Euro exchange rate at any moment.
Sentix commented: ‘The over 1,000 investors in the current survey are not impressed by the ongoing rumours about a ‘Grexit’. More significant from their perspective seem to be the measures of the central banks. The ECB starts its purchasing programme of government bonds today. Low yields and plenty of liquidity for banks and other companies have positive impacts on the economy.’
However, Sentix also suggested the Swiss economy was sinking into recession after the Swiss National Bank (SNB) relinquished its cap between the Euro and the Swiss Franc (EUR/CHF).
US Unemployment Rate Hits Seven-Year Low – US Dollar (USD) Jumps
Meanwhile, the US economy caused major fluctuations in the market on Friday when the US Unemployment Rate sank from 5.7% to 5.5%. Change in Non-Farm Payrolls marked a massive 295K increase in jobs in February—an event that saw the US Dollar exchange rate rally.
The US Unemployment Rate sank to its lowest level since 2008 and places further pressure on the US Federal Reserve to hike interest rates after much reiteration that increases would be driven by a tightening labour market.
Economist Paul Dales stated: ‘That [unemployment rate decrease] is quite a symbolic change that increases the pressure on the Fed to hike rates in June.’
The Canadian Dollar softened against the British Pound (CAD/GBP) when the price of oil continued its descent. Furthermore, Goldman Sachs has suggested that the price of crude could drop to below $40 a barrel.
The Canadian Dollar took a tumble during Friday’s European session after Canada’s trade deficit widened as a result of oil prices. The January deficit climbed to -$2.45 billion, up from the previous -$1.22 billion. As a result, the Canadian Dollar to US Dollar (CAD/USD) exchange rate fell by half a cent to 79.48.
British Pound Exchange Rate Forecast: GBP/EUR, GBP/USD, GBP/CAD
The British Pound could be in for some influential movement on Tuesday as Bank of England Governor Mark Carney is scheduled to speak at the House of Lords Committee. Dependent on the tone of the central banker, the GBP/EUR, GBP/USD and GBP/CAD exchange rates could all fluctuate majorly.
Any hawkish remarks or positive discussion of UK interest rate hikes could send the British Pound higher.
The British Pound to US Dollar (GBP/USD) exchange rate is reaching 1.5103. The British Pound to Canadian Dollar (GBP/CAD) exchange rate is residing at 1.9024. The British Pound to Euro (GBP/EUR) exchange rate is trending in the region of 1.3906.
