Pound Sterling (GBP) Broadly Stronger before Carney Testimony
The Pound was trading in a broadly stronger position on Tuesday as investors waited for Bank of England (BoE) Governor Mark Carney to present a testimony to lawmakers.
Carney is expected to comment on the inflation situation, and if he implies that interest rates will need to be increased sooner than currently projected in order to contain price pressures, the Pound may surge against peers like the Euro, Pound and Swiss Franc.
Earlier…
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast – Pound Back above 1.36
Although the Confederation of British Industry’s reported sales figure came in well below estimate, the Pound Sterling to Euro (GBP/EUR) currency pair steadily extended gains over the course of the European session.
The sales index plummeted to 1 in February from 39 the previous month. A reading of 35 had been expected.
However, despite the decline, CBI’s Director of Economics remained upbeat about the future sales outlook.
Rain Newton-Smith noted; ‘Looking ahead, the outlook for the retail sector is fairly positive, with the boost to household incomes from falling inflation likely to support spending. Indeed, firms remain upbeat about the businesses situation over the coming quarter.’
The GBP/EUR pairing advanced back above the 1.36 level, briefly achieving a high of 1.3618.
Earlier…
Last week the Pound Sterling to Euro (GBP/EUR) exchange rate advanced to a fresh 7-year high – climbing above the 1.3600 level – as the Pound was supported by bullish UK employment data and Greek concerns weighed on the Euro.
Although the GBP/EUR pairing gave up some of these gains on Friday as UK retail sales figures fell short of forecasts and Greece was granted a four-month extension of its current bailout, the Pound recouped around 0.3% on Monday.
The Euro was pressured lower as German IFO Business Climate, Current Assessment and Expectations gauges failed to achieve the readings expected.
The short-term nature of the Greek debt deal also limited demand for the common currency.
Additionally, bets that Bank of England Policy Maker Kristin Forbes would comment hawkishly on the subject of UK interest rate increases in today’s speech kept the Pound buoyed.
Forbes recently asserted that UK inflation could push above the central bank’s 2% target by the end of the year if interest rates aren’t raised.
In January Forbes commented; ‘Several of the scenarios would imply a faster rate of growth and higher rate of inflation in the medium-term than currently expected. These scenarios, if they occur, would imply an earlier increase in interest rates than currently expected, especially in order to ensure that any subsequent interest rate increases are slow and gradual.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3581
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast – Rupee Broadly Stronger
On Monday the Pound Sterling to Indian Rupee (GBP/INR) exchange rate fell by around -0.3% to trend in the region of 95.6040.
Although the Pound was trading in a stronger position against peers like the Euro, Australian Dollar and New Zealand Dollar, it did register a 0.2% decline against the US Dollar ahead of the publication of the Confederation of British Industry’s (CBI) Reported Sales figure.
The Indian Rupee was also trading higher against the ‘Greenback’ thanks to firmness in the liquidity market and increased US Dollar selling among local banks and exporters.
With Indian data in incredibly short supply this week, movement in the GBP/INR currency pair is likely to be the result of UK news.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate hit a low of 95.4510
Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast – Franc Posts Broad-Based Declines
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate surged by over 1.0% on Monday as the Swiss currency broadly softened as a result of reduced demand for safe-haven assets.
Although there are still plenty of unknowns surrounding the recently brokered Greek debt agreement, the fact that the odds of a ‘Grexit’ taking place have fallen considerably bolstered higher-risk assets.
The Swiss Franc lost 0.9% against the US Dollar and was trading close to a five-week low against the Euro.
According to currency strategist Peter Kinsella; ‘The move in the Swiss Franc is broadly in line with the overall pick up in risk appetite. Clearly, they want to keep Greece in the Eurozone and as a consequence some of the safe-haven plays are being unwound.’
This morning the Swiss National Bank (SNB) published data showing that deposits were down from 384.92 billion Francs to 382.97 billion Francs in the week ending February 20th.
The next Swiss report to be aware of, the nation’s UBS Consumption Indicator, is due for publication on Wednesday.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate was trading in the region of 1.4601
