The Pound Sterling (GBP) exchange rate was bullish last week as BoE interest rate hike expectations increased demand for the British asset, however, the GBP/EUR, GBP/USD and GBP/CAD exchange rates all eased lower on Tuesday as investors took advantage of recent highs.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Greek Uncertainty Eases, Grexit Odds Dip, Common Currency Stabilises
At the close of last week the Pound Sterling to Euro (GBP/EUR) exchange rate achieved its strongest level since before the onset of the global economic crash.
With the Pound buoyed by hints that the Bank of England (BoE) will adjust borrowing costs earlier than previously projected the GBP/EUR currency pair advanced all the way to 1.44 before the weekend.
Sterling wasn’t able to hold this dizzy high however and shed around 0.5% over the course of Tuesday’s European session.
In a sign that the worst of the Greek crisis has passed, Greek banks reopened at the start of this week following a three-week bank holiday.
The appeal of the Euro also increased as Greece was able to meet its debt repayment to the International Monetary Fund (IMF).
Whether or not the Euro continues to recover ground against Sterling largely depends on the contents of tomorrow’s BoE meeting minutes. A divided Monetary Policy Committee (MPC) would be Pound-supportive but a united front on interest rates could push the Pound lower.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a low of 1.4231
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: Fed Predicted to Raise Rates First, ‘Cable’ Slumps
The Pound Sterling to US Dollar (GBP/USD) exchange rate spent Tuesday fluctuating around the 1.5550 level as bets that the Federal Reserve will increase interest rates before the Bank of England kept ‘Cable’ under pressure.
The day’s only UK report, government spending figures, failed to lend the Pound any support despite showing that the UK’s budget deficit for June was the smallest recorded in any June since 2008.
Shadow Chancellor Chris Leslie said of the report; ‘Today’s update cannot hide George Osborne’s broken promise on the deficit or the fact the national debt now stands at 1.51 trillion Pound. Under this Chancellor the national debt has soared and he has failed to build a more productive economy based on higher living standards and better wages.’
While tomorrow’s BoE meeting minutes are likely to impact GBP/USD exchange rate trading, investors will also be looking to the US existing home sales report for guidance on what direction to drive the pairing.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a low of 1.5527
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast: ‘Loonie’ Recovers from Over Six-Year Low
After the Bank of Canada (BOC) slashed interest rates to a record low 0.5% last week, the Canadian Dollar tumbled across the board.
The GBP/CAD currency pair advanced beyond a six-year high as investors dwelt on the diverging policy outlooks of the BoE and BOC, but profit-taking has since driven the Pound 0.2% lower than the day’s opening level.
The only Canadian ecostat likely to inspire much in the way of ‘Loonie’ movement this week is the nation’s retail sales report, scheduled for publication on Thursday. A strong consumer spending figure would reduce the odds of the Fed making any more revisions to borrowing costs and could help the Canadian Dollar recover lost ground.
The UK is also set to release retail sales numbers on Thursday.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate hit a low of 2.0171
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.4311, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5544 and the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trading in the region of 2.0198