Pound Sterling (GBP) Exchange Rate Forecast
Although the Pound Sterling to Euro (GBP/EUR) exchange rate advanced on Thursday in response to some pessimistic remarks from the European Central Bank (ECB), the British asset eased lower against the US Dollar. The Pound to US Dollar (GBP/USD) exchange rate was trending in the region of a nine-month low in light of the Bank of England’s neutral interest rate decision. The BoE opted to leave the benchmark interest rate at 0.5%, as economists expected, and kept the level of asset purchases unchanged. While today’s UK Construction Output and Trade Balance figures could affect the Pound Sterling exchange rate, the next market-moving UK report (the nation’s employment figures) is scheduled for publication next week. An improvement in the pace of average wage growth in the UK could up the odds of a Bank of England rate hike and lend the Pound support.
Euro (EUR) Exchange Rate Forecast
The Euro has been trending lower against peers like the US Dollar (EUR/USD) and Pound (EUR/GBP) this week as a result of disappointing economic reports for the Eurozone and its largest economies. Data showed that the Italian economy returned to recession in the second quarter while the level of Factory Orders and Industrial Production in Germany fell short of forecasts. However, the main cause of weakness in the Euro exchange rate was the European Central Bank’s (ECB’s) interest rate decision. As some economists expected, the ECB continued with its ‘wait-and-see’ strategy – opting to leave policy unchanged until it can gauge the impact the batch of stimulus measures introduced in June have had on the 18-nation currency bloc. While this decision failed to have much of an impact on the Euro, the Common Currency did falter in response to some fairly pessimistic comments issued by ECB President Mario Draghi. As well as intimating that the central bank stands ready to bring in additional stimulus measures (should they prove necessary) Draghi asserted that the geopolitical situation could put the Eurozone’s tentative economic recovery under pressure. Today the Euro (EUR) exchange rate could fluctuate in response to Germany’s Trade Balance Figures.
Canadian Dollar (CAD) Exchange Rate Forecast
After softening against several of its peers this week amid fluctuating crude oil prices, geopolitical crises and strong US fundamentals, the Canadian Dollar (CAD) exchange rate advanced on Thursday in response to upbeat domestic reports. Canadian building permits were shown to have increased by 13.5% in June, month-on-month, following a positively revised gain of 15.4% in May. A -1.9% decline had been anticipated. Meanwhile, the Ivey Purchasing Managers Index returned strongly to growth territory in July, leaping from 46.9 to 54.1 instead of achieving the 53.0 projected. With Canadian employment data due to be released this afternoon, fluctuations in the Canadian Dollar (CAD) exchange rate have been forecast. If the data delivers a positive surprise, the ‘Loonie’ could rally.
UPDATED 12:40 08 August, 2014
Pound Sterling (GBP) Holds Declines
As the European session progressed on Friday the Pound Sterling (GBP) exchange rate was trending in a softer position against the Euro (EUR), US Dollar (USD) and Australian Dollar (AUD).
Although the UK’s Construction Output report topped forecasts, with the data showing a 1.2% month-on-month increase following a negatively revised decline of -1.2% in May, the UK’s Total Trade Balance figures were less impressive and put the Pound under pressure.
With UK employment figures looming, next week is also likely to be one of Pound volatility.
Stay tuned for today’s up to date exchange rate news!
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