The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened by around 0.30%. The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.40% on Wednesday morning.
After Greece managed to pay the International Monetary Fund (IMF) €200 million, the shared currency strengthened versus the majority of its most traded currency rivals. A disappointing Eurozone retail sales data result was offset by generally positive services and composite data from many Eurozone economies.
The Pound Sterling, meanwhile, softened versus many of its most traded currency rivals despite registering positive services growth. The downtrend can be linked to a combination of lower shop prices and ongoing political uncertainty as the general election draws ever closer.
After US trade data showed the deficit widened by considerably more-than-expected, the US Dollar declined versus the majority of its most traded currency competitors. The poor data result added to a recent string of less-than-ideal data results and forced futures traders to pare bets as to the timing of a Federal Reserve rate hike.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7387.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1211.
Euro (EUR) Exchange Rate Strengthens despite Poor Eurozone Retail Sales
March’s Eurozone Retail Sales came in at 1.6% on the year, missing the median market forecast growth of 2.4%. On the month, March’s Eurozone Retail Sales declined by -0.8%. The disappointing results had minimal impact on the common currency, however, after sentiment improved following Greece’s IMF repayment. ‘It’s done, the money is on its way,’ an official said, on condition of anonymity.
Whilst the repayment has been received well by traders, the likelihood that Greece will make the May 12th deadline to repay €750 million is looking increasingly unlikely as Athens continues to struggle to secure vital bailout funds.
Also supporting demand for the single currency was generally positive domestic data from Eurozone economies. Spanish, Italian and French Services data all improved upon previous figures. Chris Williamson, Chief Economist at Markit said: ‘The final PMI data for April came in slightly stronger than the preliminary flash readings, notably for France, suggesting that the Eurozone economy more or less maintained the same growth momentum seen in March.’
Pound Sterling (GBP) Exchange Rate Softens ahead of General Election
With the general election results due early on Friday morning, mounting political uncertainty has hampered investor confidence significantly. The race is extremely close and the potential for neither of the major parties to win a clear majority has heightened. With many unknowns as to whether a new coalition will be formed, the likelihood of a massive policy overhaul has seen investors tread cautiously.
Positive British Services data had minimal impact in terms of provoking a Sterling uptrend. This is mostly due to election jitters but also in response to less-than-ideal shop prices data.
US Dollar (USD) Exchange Rate Softens ahead of Data
After a long succession of disappointing domestic data results, the US Dollar is trending lower versus the majority of its most traded currency rivals. Tuesday’s trade data, which showed the deficit widened beyond expectations, lubricated the ‘Greenback’ (USD) slide.
Futures traders will be hoping for improvement in Mortgage Applications and ADP Employment Change in order to initiate a rebound. With the Federal Reserve outlining data results as the key driver of policy changes, the string of poor results has caused futures traders to delay bets as to the timing of a Fed rate hike. Many have adjusted forecasts to accommodate a rate hike in 2016.
Euro to Pound Sterling (EUR/GBP) and US Dollar (EUR/USD) Exchange Rates Forecast to Hold Gains
Although the geopolitical situation in Greece is far from resolved, the Euro to Pound Sterling (EUR/GBP) and US Dollar (EUR/USD) exchange rates are likely to hold gains for the remainder of Wednesday’s European session. With that being said, however, if US data prints positively there is a high potential for a ‘Greenback’ rally.
Thursday ought to see heightened volatility for both the EUR/GBP and EUR/USD exchange rates with several influential data publications due for Europe and the US.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within the range of 0.7364 to 0.7420.
The Euro to US Dollar (EUR/USD) exchange rate was trending within the parameters of 1.1173 to 1.1270.
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