Pound Sterling to US Dollar (GBP/USD) Conversion Rate Forecast to Hold Losses after US Consumer Prices Better Estimates
The Pound Sterling to US Dollar (GBP/USD) exchange rate declined by around -0.4% on Friday afternoon.
On Friday the British Pound softened versus all but the commodity-correlated assets in response to growing pessimism regarding Prime Minister David Cameron’s ability to persuade European Union officials to back reforms to the UK-EU relationship.
Although there were initially murmurs of positivity as he entered discussions already backed by heavyweights such as European Commissioner Jean-Claude Junker and German Chancellor Angela Merkel, the longer talks drag on the more analysts fear a repeat of the Greek talks last year.
To refresh your memory, Greek Prime Minister Alexis Tsipras campaigned tirelessly for bailout funds and pushed for major reforms. The talks ended with Tsipras receiving financial aid at the cost of most of his political parties supposed ‘Red Lines’, having to bend to the will of officials demanding rapid changes to the nation’s austerity measures.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4259.
Meanwhile, the US Dollar has enjoyed marked appreciation versus its major peers during Friday’s European session.
The US Dollar uptrend can be linked to damp market sentiment as falling oil prices and global stock volatility sees heightened demand for safe-haven assets.
Also supportive of US Dollar demand was positive domestic data. Of particular significance was January’s Consumer Price Index which advanced to 1.4% on the year, bettering the median market forecast 1.3%.
Core consumer prices also bettered estimates, but US gains were somewhat limited as January’s wage growth declined from previous figures.
Pound Sterling to Canadian Dollar (GBP/CAD) Conversion Rate Predicted to Strengthen as Crude Oil Prices Pare Recent Gains
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate edged higher by around 0.2% on Friday afternoon.
Such is the significance of these negotiations that better-than-forecast domestic data failed to coincide with Sterling appreciation.
British Retail Sales advanced by 2.3% and 5.2% on the month and year respectively. This could have a positive impact on consumer prices if spending continues to outpace projections.
Another positive collection of domestic ecostats were public finances data which showed the headline budget surplus rose to the highest of any January since 2008. However, most analysts agree that Chancellor George Osbourne will still be unable to keep his borrowing targets for the 2015/16 tax year.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9726.
Despite publishing fairly positive domestic data, the Canadian Dollar softened versus many of its currency competitors.
January’s Canadian Consumer Prices and Core Consumer Prices bettered estimates on both a monthly and annual basis. However, this was somewhat counteracted by a much larger-than-anticipated contraction in December’s Retail Sales.
The main contributor to the ‘Loonie’ (CAD) depreciation today is falling crude oil prices following US oil inventories data which showed stockpiles had grown.
Trader demand for less-risky assets has also added to the Canadian Dollar downtrend.
Pound Sterling Exchange Rate Forecast: EU Negotiations to Continue to Drive GBP Volatility
With the EU summit looking increasingly likely to extend into the weekend, developments in talks between Cameron and EU officials will likely be the principle driver of all Sterling exchange rates.
Market sentiment will play a larger hand in US Dollar and Canadian Dollar exchange rate movement.
The Canadian Dollar will also be subject to any price swings in crude oil.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.4246 to 1.4338 during Friday’s European session, whilst the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 1.9640 to 1.9753.
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