Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains despite Slower-than-Forecast UK Services Output
The Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.4% on Wednesday afternoon.
Despite the fact that British data showed that the services sector failed to grow in line with economists’ forecasts, the Pound held gains versus many of its currency rivals. The appreciation can be linked to speculation that the UK government’s recent sale of Royal Bank of Scotland (RBS) shares will attract foreign investors. The UK Services PMI came in at 57.4 in July; missing the median market forecast 58.0. In addition, July’s Composite PMI failed to meet with the market consensus of a drop from 57.4 to 56.9, with the actual result being 56.6.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4357.
Although European data produced mostly positive results, a particularly disappointing Eurozone retail sales publication weighed on demand for the common currency. Eurozone Retail Sales declined by -0.6% on the month in June; failing to meet with the market projection of -0.2%. On the year, Eurozone Retail Sales grew by 1.2%; much lower than the 2.0% forecast. Also weighing on the common currency is increasing speculation that Greece will not be able to sustain a recovery under the current debt load. The National Institute of Economic and Social Research (NIESR) showed that global economic growth is set to slow even as they account for Greek debt relief, which is likely to be a sticking point which causes delays to a final decision being made on the terms for Greece’s third bailout.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.4292 to 1.4378 during Wednesday’s European session.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Advance on RBI Rate Cut Predictions
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate ticked higher by around 0.3% on Wednesday afternoon.
In response to the UK services data, Chris Williamson, Chief Economist at Markit stated; ‘Despite the dip in the PMI in July, the service sector continues to act as the main driver of economic growth. The survey data point to GDP growth merely easing from 0.7% in the second quarter to a still-impressive 0.6% at the start of the third quarter, which will do little to deter hawks at the Bank of England from voting for higher interest rates. However, the majority of MPC members will most likely see no need to rush into hiking rates any time soon. The doves will view the recent signs of cooling economic growth and slower job creation, also noting that inflation is currently zero and shows few signs of lifting higher due to the strong Pound and falling oil prices.’
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 99.5820.
Oil prices gained in the early stages of Wednesday’s European session, causing the Rupee to decline versus many of its peers. However, crude prices stabilised as the session progressed which helped the Rupee recover some of its early losses. However, even if oil prices were to decline significantly, the Rupee is likely to hold losses given that many analysts are predicting the Reserve Bank of India (RBI) will cut the cash rate in September. ‘We expect the RBI to cut rates by 25 bps in the September meeting, followed by further rate cuts of 25-50 bps through quarter ended March 2016,’ a Morgan Stanley report said.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate was trending within the range of 99.0660 to 99.7360 during Wednesday’s European session.