The Pound Sterling to US Dollar (GBP/USD), Canadian Dollar (GBP/CAD) and Euro (GBP/EUR) exchange rates may be in for some fluctuations during Friday’s trading with the release of UK Trade Balance stats.
The UK’s deficit widened more than forecast, rising from -£1841 to -£2895. The UK is rumoured to be undergoing a slowdown and Friday’s trade balance stat could support this speculation and pressure Sterling lower.
Meanwhile, the Canadian Dollar remained above 80 US cents versus the US Dollar (CAD/USD) in the first half of Friday’s European trading as oil price volatility continued. Thursday saw the ‘Loonie’ jump by almost a cent during Thursday’s session as oil prices rose and Canada’s trade deficit widened by less than forecast.
The North American nation’s deficit widened to -$649 million in December after November’s -$335 million—a more favourable ecostat than the -$1.2 billion that had been predicted. Rising exports have been accredited to the lower than expected trade deficit.
TD Bank economist Brian DePratto commented: ‘While a decline in the trade balance was expected for December, today’s report provides a somewhat pleasant surprise as the underlying picture was more positive than expected.’
In addition, economists are hopeful that exports will continue to pick up in the near future.
Economist Josh Nye stated: ‘Looking ahead, low oil prices will continue to weigh on nominal exports but a weaker Canadian Dollar and stronger US demand should help export volumes pick up further with trade expected to make a solid, positive contribution to growth in 2015.’
Meanwhile, the Euro has been experiencing an interesting week amid Greek negotiations, ECB statements and data releases. Friday saw German Industrial Production contract further on the year from -0.3% to -0.7% after December recorded only 0.1% growth. Economists had forecast annual contraction of -0.3% and 0.4% monthly expansion.
Pound Sterling Exchange Rate Forecast: GBP/USD, GBP/CAD, GBP/EUR
Friday will see European Central Bank (ECB) officials speak which could impact the Euro to Pound Sterling (EUR/GBP) exchange rate.
The US Dollar could be in for an interesting day on Friday with the release of the much anticipated US Change in Non-Farm Payrolls and US Unemployment Rate figures. Joblessness is expected to remain at 5.6% in January as the US economy creates 230K jobs.
However, any unfavourable labour market ecostat could severely pressure the US Dollar to Pound Sterling (USD/GBP) exchange rate as the Federal Reserve has often reiterated that any interest rate hikes will be driven by strong employment numbers.
Thursday saw US Initial Jobless Claims fall lower than expected, coming in at 278K rather than the initial forecast of 290K.
The Canadian economy will also publish Net Change in Employment and Unemployment Rate figures at 13:30 GMT. The unemployment rate is forecast to remain at 6.7% in January.
The Pound Sterling to US Dollar (GBP/USD) exchange rate resides at 1.5320. The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending in the region of 1.9079. The Pound Sterling to Euro (GBP/EUR) exchange rate is hovering at 1.3371.
