The Pound Sterling to Euro (GBP/EUR) exchange rate dived by around -0.54% on Thursday morning, whilst the Pound to US Dollar (GBP/USD) exchange rate is trending within a narrow range.
Thursday’s solitary British data publication failed to meet with expectations, causing the Pound to soften versus the majority of its most traded currency rivals. Additional declination can be attributed to ongoing political uncertainties as we approach the general election amid amplified fears of a dramatic policy change.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3697.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4828.
Pound Sterling (GBP) Exchange Rate Softens on Disappointing Data
After having enjoyed a surge as the week began amid positive data results and hawkish words from Bank of England (BoE) Governor Mark Carney, the Pound slumped in the latter half of the week. This is mostly the result of damp investor confidence. Given that general election opinion polls have showed no clear majority, a hung parliament is very possible. This would give balance of power to a lesser party and could see very dramatic changes to policy.
In addition to the general election weighing on demand, a succession of disappointing data results aided the Pounds declination. Thursday has seen a continuation of disappointing data after the solitary construction publication failed to meet with expected growth. The UK Construction PMI was forecast to tick lower from 60.1 to 59.8, but the actual result dropped to 57.8.
Tim Moore, Senior Economist at Markit, said; ‘UK construction output growth has settled in at a strong pace so far in 2015, although the recovery has lost some of its swagger since last year. All three main categories of construction activity saw a growth slowdown in March, in part reflecting softer new business gains as some clients delayed spending decisions ahead of the general election.’
Pound Sterling (GBP) Exchange Rate Forecast to Soften
It is very unlikely that Sterling will sustain any significant appreciation ahead of the results from the general election. Therefore, it is much more likely that the Pound will continue to soften versus many of its major peers. A complete absence of domestic data on Friday, a UK bank holiday, is likely to compound the declination initiated on Thursday.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the parameters of 1.3689 and 1.3784, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the region of 1.4813 and 1.4868.