The Euro to Pound Sterling (EUR/GBP) exchange rate advanced in Thursday’s trading while the Euro to US Dollar (EUR/USD) exchange rate was trending lower on account of the Federal Reserve meeting minutes release.
The Federal Open Market Committee (FOMC) had noted a divergence of opinions in the March 17/18th meeting relating to an interest rate hike in June, which caused a US Dollar exchange rate rally.
Earlier… The Euro to Pound Sterling (EUR/GBP) exchange rate sank in Wednesday’s European trading while the Euro to US Dollar (EUR/USD) exchange rate managed to climb ahead of the US Federal Reserve meeting minutes later in the session.
However, this week has seen dovish Federal Resereve Minneapolis President Narayana Kocherlakota state that the central bank shouldn’t begin hiking interest rates until 2016.
Kocherlakota stated: ‘I do worry about the ongoing conversation about tightening monetary policy being a drag on economic performance both in terms of growth and in terms of employment outcomes. I continue to believe that it would be a mistake to raise the target range for the Fed funds rate in 2015.’
The Euro has taken a hit in recent months as negotiations between Greece and financial heads appear to be suffering from lethargy as the nation edges closer to running out of money.
Furthermore, while Greece is supposed to be working out a deal with Eurozone financial heads before orthodox Easter (April 12th), this week has seen Prime Minister Alexis Tsipras fly out to Moscow to meet with Russian President Vladimir Putin.
The choice to move the meeting forward at such an important time has been speculated to be a sign of a desperate nation making back-up plans for financial aid if the Eurozone talks don’t progress in Greece’s favour.
However, one Greek official has denied the rumours, saying: ‘We have not asked for financial aid. We want to solve our issued of debt within the Eurozone.’
Austria threw in its two cents today as well to warn Greece about the problems attached to cuddling up to Russia.
Arriving earlier today in Moscow ahead of tomorrow’s meeting with Russian President, V. Putin. @PutinRF_Eng #Greece pic.twitter.com/HyW5FoPZ6R
— Alexis Tsipras (@tsipras_eu) April 7, 2015
Austrian finance minister Hans Joerg Schelling stated: ‘It’s perfectly normal for talks to take place but I would urgently warn against getting closer. We are in the middle of final negotiations for financing for Greece and I don’t believe that a good game is being played here.’
#Russia president #Putin & #Greece PM Tsipras meet in Moscow http://t.co/F7Hl9PF2aK pic.twitter.com/FPEGmDoSMg /via @RT_com
— Yannis Koutsomitis (@YanniKouts) April 8, 2015
US Dollar to Euro (USD/EUR), US Dollar to Pound Sterling (USD/GBP) Exchange Rate Forecast
Meanwhile, the US Dollar is trading tentatively ahead of the Federal Reserve minutes due out in the North American session. The record of the March meeting came ahead of last week’s disappointing US payrolls data and therefore any hawkish comments regarding the labour market could be slightly outdated in light of the sector’s sudden underperformance.
The US Dollar exchange rate is likely to fluctuate massively ahead of the release as investors’ hedge their bets on whether the Fed will be likely to hike rates in the near future.
Currency strategist Camilla Sutton commented: ‘The bigger, broader pieces are that the US economy should still outperform and the Fed is likely to raise interest rates sooner than everyone else. The Dollar strength story is still intact, we’re just in a pause because the Dollar lacks a catalyst to push it to new highs.’
The US Dollar advanced against majors such as the Pound Sterling (USD/GBP) and Euro (USD/EUR) this week, on general upbeat market sentiment.
Foreign exchange expert Bill Samela commented: ‘Perhaps they (investors) shrugged off the nonfarm data and looked at it a little deeper. Maybe they saw underlying factors were good and determined that the report was not something that is continuous or the start of a weakening period.’
However, with that said, the US Dollar to Canadian Dollar (USD/CAD) exchange rate has hit a fresh one-month low on Wednesday which could be the start of an interesting day of trading for the ‘Buck’.
Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
Meanwhile, the Pound Sterling exchange rate could be in for hefty fluctuations on Thursday with the Bank of England (BoE) scheduled to announce its latest interest rate decision.
By way of data, Wednesday was a mixed day when the British Retail Consortium’s (BRC) Shop Price Index fell further on the year in March to -2.1% from the former -1.7%. However, the ecostat is a result of tumbling inflationary levels worldwide.
Industry expert Mike Watkins stated: ‘Deflation is likely to be with us for the near future, which means shoppers are going to be able to stretch their budgets further when shopping.’
‘The implication for food retailers is that this may help sustain the slowly improving sales volumes we have seen in recent weeks, and also encourage consumers to spend some of their savings on affordable indulgences.’
However, March’s New Car Registration ecostat hit the highest on record for the month at 492,774 while also boasting the most upbeat figure since 1999.
Expert in the field Mike Hawes commented: ‘We expect a more stable market over the year ahead.’
Euro to Pound Sterling (EUR/GBP), Euro to US Dollar (EUR/USD) Exchange Rate Forecast
The meeting between Greece and Russia will be closely eyed today, while investors look ahead to Thursday’s data. German Industrial Production and Trade Balance ecostats will be out, as well as UK Trade Balance figures.
The US Initial Jobless Claims and Continuing Claims numbers will also emerge and could offer moderate movement to the US Dollar. Furthermore, the BoE announcement and aftermath of the Federal Reserve minutes will also impact EUR/USD and EUR/GBP trading.
The Euro to US Dollar (EUR/USD) exchange rate is trading at 1.0865; the Euro to Pound Sterling (EUR/GBP) exchange rate is trending in the region of 0.7272.
