The Pound Sterling to Euro (GBP/EUR) exchange rate was trending lower on Tuesday as Greek hopes buoyed the common currency, while the Pound Sterling to Canadian Dollar (GBP/CAD) and Pound Sterling to US Dollar (GBP/USD) exchange rates were both trending higher after Markit’s UK Construction Purchasing Managers Index (PMI) printed above forecasts.
Markit’s UK Construction PMI Rose above Forecast Allowing GBP/USD, GBP/EUR and GBP/CAD Gains
The UK’s May Construction PMI reached 55.9, skimming over the 55.0 forecast after April’s 54.2 reading.
Markit economist Tim Moore stated: ‘May’s survey provides the first sign of a post-election bounce in the UK construction sector. With a sustained period of policy uncertainty no longer on the horizon, business confidence surged back to its highest level since early-2006.’
Euro (EUR) Exchange Rate Buoyed by Berlin Financial Heads Meeting and Greek Optimism
Meanwhile, the Euro (EUR) exchange rate was able to trend higher against a host of other majors on Tuesday after an emergency summit between financial leaders took place last night in Berlin. Investor sentiment increased as hopes for a deal being struck by the end of the week surged. Greece is due to make a payment to the International Monetary Fund (IMF) on Friday but is unlikely to be in a position to fulfil its obligations if no agreement is in place.
The Berlin meeting consisted of Angela Merkel, Francois Hollande, Mario Draghi, Christine Lagarde and Jean-Claude Juncker.
Strategist Mathias van der Jeugt stated: ‘The fact that five such political and financial heavyweights met about Greece means they are trying to force a break in the political deadlock and that’s a positive development that’s likely to lift risk sentiment. But we will have to wait to see the Greek reaction.’
US Dollar (USD) Exchange Rate Awaits US Change in Non-Farm Payrolls and Unemployment Rate Stats
Meanwhile, the US Dollar has been surging in popularity recently as a stream of positive US ecostats have emerged. Monday saw the release of US ISM Manufacturing data, which registered above forecast growth of 52.8 from the previous month’s 51.5.
Tuesday’s a moderately influential day for the US economy with the release of US Factory Orders data. However, Wednesday will be another major day for US Dollar to Pound Sterling (USD/GBP), US Dollar to Euro (USD/EUR) and US Dollar to Canadian Dollar (USD/CAD) exchange rate movement with the release of the US ISM Non-Manufacturing Composite. At present, the index is forecast to decline from 57.8 to 57.0 in May which could cause the US Dollar to sink.
The main event for the ‘Buck’ exchange rate this week will come in the form of Friday’s US Change in Non-Farm Payrolls and Unemployment Rate stat. Any improvements in the labour market are likely to see a rally in the USD/CAD, USD/EUR and USD/GBP currency pairs.
The Canadian Dollar also enjoyed a little support on Tuesday as oil prices were able to increase. The rise in crude oil values comes ahead of Friday’s Vienna Organisation of Petroleum Exporting Countries (OPEC) meeting, which will see ministers discuss levels of production. Hopes are high that OPEC will keep production at its current high levels rather than increasing output further.
Saudi Arabia’s oil minister Ali al-Naimi suggests that oil demand is likely to increase in the second half of the year, saying: ‘Demand is picking up. Good! Supply is slowing, right? That is a fact. You can see that I’m not stressed, I’m happy.’
Pound Sterling to Canadian Dollar (GBP/CAD), Pound Sterling to US Dollar (GBP/USD), Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
The GBP/CAD, GBP/USD and GBP/EUR currency pairs are likely to experience some hefty fluctuations towards the end of the week with the Bank of England (BoE) due to announce its latest interest rate decision and release its 12-Month Inflation Forecast.
Friday will also see the release of the Canadian Unemployment Rate and Net Change in Employment figures which are forecast to cause major market movement for the Canadian Dollar to US Dollar (CAD/USD), Canadian Dollar to Euro (CAD/EUR) and Canadian Dollar to Pound Sterling (CAD/GBP) exchange rates.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trading at 1.9110. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending in the region of 1.5260. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the vicinity of 1.3882.