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Pound Sterling to US Dollar (GBP/USD), Euro (GBP/EUR), Canadian Dollar (GBP/CAD) Exchange Rate Forecast: BoE Inflation Forecasts Slip, Bundesbank Upgrades Growth Predictions

Bank of England

The Pound Sterling to US Dollar (GBP/USD), Pound Sterling to Canadian Dollar (GBP/CAD) and Pound Sterling to Euro (GBP/EUR) exchange rates were all trading amid highly influential events on Friday which were forecast to cause some significant market movement.

Euro (EUR) Exchange Rate Supported by Bundesbank Growth Forecasts and German Factory Orders

The Euro (EUR) was offered some support on Friday when German Factory Orders climbed by 0.4% in the month of April on the year, rather than contracting by -0.6% as economists had forecast, after March’s 2.0%.

The month alone registered 1.4% growth in comparison to the 0.5% prediction. Additionally, Germany’s central bank, Bundesbank, announced that it had upgraded its growth forecasts for both 2015 and 2016.

Bundesbank stated: ‘The German economy has recovered from the lull in mid-2014 more quickly than expected and has returned to a path of growth that is supported by both internal and external demand.’
‘The domestic economy is notably reaping the benefits of the favourable labour market situation and substantial income growth. This is having an effect on private consumption as well as on housing construction.’

Additionally, investors are hoping for a positive outcome from Greece’s ongoing negotiations with creditors. Presently, markets are waiting for Prime Minister Alexis Tsipras to make a speech which could cause major Euro (EUR) exchange rate fluctuations.

US Dollar (USD) and Canadian Dollar (CAD) Awaiting Employment Data amid IMF Warning

Meanwhile, the US and Canada are both awaiting highly influential payrolls data which is likely to send tidal waves through the market.

US Change in Non-Farm Payrolls is forecast to come in at 227K in May, while the US Unemployment Rate is predicted to remain at 5.4%. The Canadian Net Change in Employment figure is expected to come in at 10.0K in May and the Canadian Unemployment Rate is pegged to stagnate at 6.8%.

The US data in particular is being eyed closely as investors attempt to forecast whether the Federal Reserve will begin to hike interest rates in the near future or not.

However, the International Monetary Fund (IMF) has warned that the Fed should refrain from hiking rates until 2016 as risks in the financial system mount and the event may cause the ‘significant and abrupt rebalancing of international portfolios with market volatility and financial stability.’

Additionally, for the Canadian Dollar (CAD), a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) held in Vienna today will likely cause some major ‘Loonie’ exchange rate fluctuations.

Pound Sterling (GBP) Exchange Rate Remains Lower after Dovish Bank of England (BoE) Inflation Report

Meanwhile, the Pound was offered little support from a rather dovish Bank of England (BoE) inflation report on Friday.

The report read: ‘Asked about expectations of inflation in the longer term, say in five years’ time, respondents gave a median answer of 2.8%, compared with 3.0% in November.’

The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending in the region of 1.9178. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending at 1.5310. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the vicinity of 1.3611.