The British Pound to Euro (GBP/EUR) and British Pound to Canadian Dollar (GBP/CAD) exchange rates fell after UK inflation figures, whereas the British Pound to US Dollar (GBP/USD) exchange rate remained in a narrow range after weak US Housing stats.
The UK Consumer Price Index (CPI) tumbled to 0.3% on Tuesday, below the previous 0.5% and 0.4% forecast.
Meanwhile, the US NAHB Housing Market Index slipped from 57 to 55 in February rather than rising to 58.
Earlier… The British Pound to Euro (GBP/EUR), British Pound to Canadian Dollar (GBP/CAD) and British Pound to US Dollar (GBP/USD) exchange rates were all bearish in Tuesday’s European trading ahead of the release of the UK Consumer Price Index (CPI)
Investors will be scrutinising the inflation figure carefully after recent statements from the Bank of England (BoE).
Earlier… The British Pound to Euro (GBP/EUR), British Pound to Canadian Dollar (GBP/CAD) and British Pound to US Dollar (GBP/USD) exchange rates all fell during Monday’s trading after Rightmove’s House Price Index fell on the year and investors forecast a weak UK inflation reading on Tuesday.
UK House Prices Fall in February on the Year – British Pound (GBP) Weakens
The Rightmove House Price Index recorded a 2.1% gain in February after January’s 1.4% increase; however, the annual figure was dragged down from highs of 8.2% to only 6.6%.
Rightmove director Miles Shipside commented: ‘We’re now over a month into 2015, and despite predictions that the upcoming May election could slow home-mover interest, Rightmove has recorded its busiest ever month for traffic and leads to agents. This demand has contributed to new seller asking prices being up across all regions this month, by a national average of over £5,000.’
‘Decades of inadequate provision of homes to satisfy growth in demand are having an increasing effect, with a tight-stock market resulting in a shortage of quality property for sale to trade up to.’
Meanwhile, Tuesday’s UK Consumer Price Index (CPI) is expected to fall from 0.5% to 0.4% in January on the year as softer oil prices weigh on inflation the world over. The Bank of England (BoE) recently announced that it forecast inflation to sink temporarily below 0.0% in coming months.
Both the US and Canadian markets are closed on Monday due to public holidays, leaving both their currencies volatile to global developments amid a lack of domestic data.
Oil Price Increase Supports Canadian Dollar (CAD) Exchange Rate
Oil prices rose on Monday, allowing the Canadian commodity currency a little support against other majors such as the British Pound (CAD/GBP).
The rise in black gold came after Kuwait’s oil minister suggested that lower supply levels would support prices in the second half of the year.
Minister Ali al-Omair commented: ‘[Oil] will start holding gains now and hopefully in the second half of 2015 we will see better prices.’
In addition, Egypt has bombed Islamic State targets in Libya, which resulted in a fire at a pipeline at the Sarir oil field and subsequently , caused fear over production.
The Canadian Dollar to British Pound (CAD/GBP) exchange rate could fluctuate on Tuesday when the Canadian Existing Home Sales stat is released; the data contracted in December by -5.8%. Canadian Retail Sales numbers are due for publication on Friday.
US Federal Reserve Meeting Minutes Forecast to cause US Dollar Fluctuations
Meanwhile, the US Dollar could be in for a busy week with the Federal Reserve expected to release its January meeting minutes on Wednesday. Any sign of a step toward interest rate increases could cause the US Dollar to British Pound (USD/GBP) exchange rate to rally.
Other potentially influential US data will come on the form of the NAHB Housing Market Index, Empire Manufacturing and Net Long-Term TIC Flows on Tuesday, followed by MBA Mortgage Foreclosures and Mortgage Delinquencies on Wednesday.
Euro (EUR) Exchange Rate Volatile amid Greek Austerity Talks
The Euro has been trading rather buoyantly despite ongoing negotiations between Greece and its creditors. The single currency has the potential to fall if the possibility of a Grexit looks likely. Although Greek officials have been upbeat, other Eurozone representatives have been less optimistic about progress in negotiations at this time.
Monday will see Eurogroup heads meet in Brussels to discuss the situation.
Strategist Susanne Galler commented: ‘The market consensus is for them to do a deal by the end of this week. But we think if there’s no deal today and the clock starts ticking then the Euro will look increasingly vulnerable.’
British Pound Exchange Rate Forecast: GBP/CAD, GBP/USD, GBP/EUR
The British Pound exchange rate could be in for major movement on Wednesday when the Bank of England releases its February meeting minutes. Although interest rates were kept on hold again, investors will carefully eye any policymaker divergence on the topic.
The British Pound to Canadian Dollar (GBP/CAD) exchange rate is residing at 1.9142. The British Pound to US Dollar (GBP/USD) exchange rate trades at 1.5383. The British Pound to Euro (GBP/EUR) exchange rate is trending in the region of 1.3479.
