The British Pound to US Dollar (GBP/USD) exchange rate sank in the second half of Wednesday’s European session after UK Gross Domestic Product (GDP) figures fell.
The NIESR Gross Domestic Product Estimate for the three months through February fell from 0.7% to 0.6%.
The British Pound to US Dollar (GBP/USD) exchange rate was trending lower in the first half of Wednesday’s European session after UK Manufacturing Production fell from 2.4% to 1.9% in January on the year rather than growing to the 2.6% forecast.
Berenberg Bank economist Christian Schulz commented: ‘The volatile monthly changes should not be over interpreted… At this early stage, the disappointing January industrial output data puts only a very minor downside risk to our call for strengthening UK GDP [Gross Domestic Product[ growth in Q1 (to 0.8% quarter-on-quarter from 0.5% quarter-on-quarter in Q4).’
Conversely, UK Industrial Production did rise in line with forecasts, from 0.5% to 1.3% on the year in January. UK data will continue in Wednesday’s session with the Bank of England (BoE) expected to release its report on the Supervision of Financial Market Infrastructures and the NIESR Gross Domestic Product Estimate still to come.
In addition, the next few days will be sprinkled with BoE officials making speeches at various events—including Governor Mark Carney in Sheffield on Thursday—which could impact the GBP/USD exchange rate. Moreover, the BoE is set to publish its quarterly bulletin on Thursday which could be another event that offers moderate movement to the British Pound.
But perhaps the rock star of the foreign exchange market this week will be the US Dollar, with some hefty data releases yet to come as well as ongoing Federal Reserve rate hike speculation.
Will USD/EUR Exchange Rate Hit 12 Year Highs?
The US Dollar to Euro (USD/EUR) exchange rate hovered near a 12-year high earlier in the week when Dallas Federal Reserve President Richard Fisher suggested he would like to begin hiking interest rates soon to allow a more gradual curve in borrowing costs.
The statement was taken seriously by investors who value the veteran policymaker’s opinion after holding a seat on the Federal Open Market Committee (FOMC) since 2005.
Additionally US Advance Retail Sales will be out on Thursday and is forecast to record +0.3% growth in February after January’s -0.8% contraction.
University of Michigan Confidence is also expected to increase on Friday from 95.4 to 95.7, and both events could see the US Dollar to British Pound (USD/GBP) exchange rates rally.
British Pound to US Dollar (GBP/USD) Exchange Rate Forecast
UK Trade Balance figures will emerge on Thursday and are likely to impact the British Pound significantly; however, Carney’s comments later in the day will also be eyed closely.
Friday’s UK Construction Output stats could be a cause for British Pound movement along with additional BoE speeches.
The British Pound to US Dollar (GBP/USD) exchange rate is residing in the region of 1.5064. The US Dollar to British Pound (USD/GBP) exchange rate is trending in the region of 0.6641.
