UPDATE
Now that traders have digested the disappointing figure from the US Labour Market Index Conditions report, the US Dollar wiped off its daily gains.
The Pound Sterling to US Dollar, Canadian Dollar exchange rates are now trending within a limited range.
Earlier…
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Losses despite Weaker-than-Expected US Labour Market Conditions Index
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.5% on Monday afternoon.
Last week the British Pound rallied versus most of its major peers thanks to correctional trading. The sharp depreciation that followed prominent UK officials showing support for a ‘Brexit’ was considered overdone, so the Pound managed to make a marked recovery against its major rivals irrespective of a number of disappointing domestic ecostats.
On Monday the Pound mostly softened versus its major peers as corrective trading finished. The depreciation can be linked to a combination of an absence of domestic data to provoke changes and concerns that the poor health of the UK’s primary sectors will cause the Bank of England (BoE) to avoid hiking the overnight cash rate for a considerable time to come.
Analysts at JP Morgan warned today that the BoE would be likely to ease monetary policy in the event of a ‘Brexit’. However, they did also state that a British exit would benefit government bonds and gilts.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4171.
The US Dollar advanced versus most of its major peers today after a survey from the National Association for Business Economics (NABE) showed that 80% of the experts surveyed still expect the Federal Reserve to hike the overnight cash rate at least once in 2016.
Somewhat tempering gains, however, was a disappointing result from February’s Labour Market Conditions Index Change which came in at -2.4; well below the median market forecast 1.0.
The current weak Euro is also supportive of US Dollar appreciation thanks to negative correlation. Speculation that the European Central Bank (ECB) will ease policy significantly on Thursday should keep pressure on the single currency and allow the US Dollar to extend the uptrend.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Trend within a Limited Range despite Rising Crude Oil Prices
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within a tight range during Monday’s European session.
Despite the fact that crude oil prices have made significant gains of late, with the prospects of $20 a barrel prices looking like a distant concern, the Canadian Dollar failed to press a marked appreciation versus its major peers.
The lack of demand for the ‘Loonie’ (CAD) is mostly the result of improved Federal Reserve rate hike bets. Since the survey published by NABE showed that traders have been undercutting the likelihood of 2016 rate hikes, the Canadian Dollar softened. Tighter Fed policy would coincide with a higher trade weighting which, in turn, makes Canada’s cross-border trade far less lucrative.
With an absence of any significant ecostats until Friday, which will see the publication of key labour market data, the Canadian Dollar is likely to continue to see movement in response to market sentiment and crude oil prices. That being said, Wednesday’s Canadian housing data may be of interest.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.8898.
Pound Sterling Exchange Rate Forecast: Quiet Data Docket to See Political Developments Cause GBP Volatility
This week’s British data docket is somewhat sparse of significant ecostats. As a result there is a high chance that political developments regarding the EU referendum will cause GBP movement. What’s more, political uncertainty is likely to have a greater impact on Sterling movement now that corrective trading has seemingly ended.
In addition to political developments, the UK Pound will see changes in response to any mention of the UK’s monetary policy from either BoE officials or prominent economic figures.
The US Dollar has a high chance of appreciation given the likelihood that the ECB will ease policy. If the US Dollar does strengthen as the Euro declines, the Canadian Dollar could come under downside pressure.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.4131 to 1.4221.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 1.8868 to 1.8969 during Monday’s European session.
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