Pound Sterling to Euro (GBP/EUR) Exchange Rate Predicted to Plummet despite Weak European Data
The Pound Sterling to Euro (GBP/EUR) exchange rate dived by around -1.1% on Thursday afternoon.
After ‘Super Thursday’ saw the Bank of England (BoE) hold the cash rate, with only 1 of nine policymakers opting for an immediate cash rate increase, the Pound dived versus its major peers. Additional depreciation can be linked to the particularly dovish quarterly inflation report which stated that inflation is likely to remain below-target throughout 2016. In addition, the BoE cut growth forecasts for both 2015 and 2016. After 80 months of holding rates, investor confidence has dampened considerably.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3998.
Despite the fact that European economic data produced disappointing results on Thursday, the common currency advanced versus many of its currency rivals. Whilst European Central Bank (ECB) President Mario Draghi reiterated the bank’s stance on future easing, he also stated that it may not be necessary. This caused the single currency to advance, although most analysts predict that the Euro will see a bearish run with Federal Reserve December rate hike prospects coming into sharper relief.
Pound Sterling to US Dollar (GBP/USD) Conversion Rate Predicted to Decline despite Soft US Labour Market Data
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.9% on Thursday afternoon.
In response to the dovish BoE outlook, Maike Currie, associate investment director at Fidelity International, stated; ‘Super Thursday has quickly turned into Superfluous Thursday. It’s now 80 months and counting since the Bank of England has failed to push the button on rising interest rates with its surprisingly dovish stance today….It leaves investors and retirees facing the ongoing conundrum of finding a home for their money in an environment of low inflation and low interest rates – a backdrop which typically makes for measly returns.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5246.
With the exception of the Pound, the US Dollar softened versus the majority of its most traded currency rivals on Thursday. The depreciation can be linked to the dovish BoE which has eased pressure on the Federal Reserve to consider hiking the cash rate. In addition, US labour market data produced disappointing results with both Initial Jobless Claims and Continuing Claims rising above expectations. Given that improved labour market conditions is one of the main pre-requisites for a Fed cash rate increase, today’s data doesn’t bode well for a December lift-off.
Pound Sterling (GBP) Forecast: Dovish BoE to Weigh on Sterling Demand
Although Friday’s British economic data has the potential to provoke Sterling volatility, the Pound is likely to see continued damp demand following today’s particularly dovish ecostats from the BoE. Therefore, it is very likely that the British asset will continue to hold a weak position versus its major peers into the weekend.
The Pound Sterling to Euro (GBP/EUR) exchange rate is was trending within the range of 1.3974 to 1.4201 during Thursday’s European session.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5219 to 1.5402.
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