The British Pound to Euro (GBP/EUR), British Pound to Canadian Dollar (GBP/CAD) and British Pound to Swiss Franc (GBP/CHF) exchange rates were trending lower in Friday’s European session while the British Pound to US Dollar (GBP/USD) exchange rate remained in a tight range.
The British Pound softened in response to a fall in GfK’s Consumer Confidence survey which failed to grow from 1 to 2 in February as economists had forecast.
GfK managing director Nick Moon commented: ‘Unless there is some dramatic change in the indicators that get media coverage, or people start feeling significantly better off as inflation edges towards zero, it is hard to see any major change between now and election.’
Meanwhile, the Euro to British Pound (EUR/GBP) exchange rate could be in for some major movement later in Friday’s European trading when German Consumer Price Index (CPI) figures are released. At present, inflation forecasts expect to see a small rise from -0.4% to -0.3% in February.
However, the Euro also faces sensitivity as Greek negotiations continue. Friday saw Germany vote in favour of Greece’s extended bailout programme.
US Dollar Forecast to Fluctuate on US GDP and Personal Consumption
The US Dollar could also be in for major exchange rate movement during Friday’s trading when US Gross Domestic Product (GDP) and US Personal Consumption figures are released. Industry experts forecast the annualised Q4 GDP stat to soften from 2.6% to 2.0% while Personal Consumption is expected to remain at 4.3%.
Thursday saw the US Dollar reach monthly highs against a whole host of other currency peers when US inflation data printed favourably. The US Consumer Price Index remained at 1.6% on the year in January after a -0.1% contraction on the month.
Meanwhile US Durable Goods Orders jumped by 2.8% in January while economists had forecast only 1.6% after December’s -3.7% contraction. The rise was the first in the latter three months.
Economist Joseph LaVorgna commented: ‘With these kinds of broad based job gains, it seems like a lot of sectors are contributing and that’s generally a good sign for all sorts of spending, including cap-ex. We’d be doing better of global growth was stronger.’
The Canadian Dollar also had a big day on Thursday when inflation figures defied forecasts. The Canadian Consumer Price Index slipped from 1.5% to 1.0% rather than the 0.8% predicted.
Meanwhile, the Bank of Canada (BOC) Consumer Price Index remained at 2.2% on the year rather than declining to 2.1% as predictions had suggested.
In addition, the favourable reading encouraged hopes that the BOC won’t be likely to cut rates in the March monetary policy meeting.
Economist Dina Ignjatovic commented: ‘Developments that have taken place since the last Bank of Canada meeting last month suggest that another rate cut in March is unlikely. Today’s inflation data is slightly ahead of the Bank’s forecast. As such, we now expect the Bank to leave rates unchanged for the remainder of the year.’
Meanwhile, the Swiss Franc was offered some support when the Swiss KOF Leading Indicator fell less than forecasts expected. The January figure had resided at 96.1 and fell to 90.1 in February instead of the predicted 89.0.
The fall in the index is the sharpest drop since 2011 and economists suggest the recent fall is a result of the Swiss National Bank’s (SNB) recent decision to remove the tie between the Euro and the Franc (EUR/CHF).
KOF stated: ‘This indicates that the monetary policy shock has already moved beyond the realm of sentiment and is now starting to manifest itself in the real economy.’
British Pound Exchange Rate Forecast: GBP/EUR, GBP/USD, GBP/CHF, GBP/CAD
The British Pound exchange rate could fluctuate on the release of UK Net Consumer Credit, Net Lending Secured on Dwellings, Mortgage Approvals and Markit’s Manufacturing Purchasing Managers Index (PMI).
With no further UK data out in the rest of the week, the GBP/EUR, GBP/USD, GBP/CHF and GBP/CAD exchange rates will experience movement from global developments and commodity price fluctuations.
The British Pound to Euro (GBP/EUR) exchange rate is residing at 1.3753. The British Pound to US Dollar (GBP/USD) exchange rate is trading in the region of 1.5444. The British Pound to Swiss Franc (GBP/CHF) exchange rate is hovering at 1.4642. The British Pound to Canadian Dollar (GBP/CAD) exchange rate is trending in the region of 1.9275.
