The Pound Sterling (GBP/EUR) exchange rate advanced by around 0.64% on Thursday afternoon. The Pound Sterling to US Dollar (GBP/USD) exchange rate rallied by around 0.89%.
In response to positive British Retail Sales data, which showed the 26th consecutive quarter of sales growth, the Pound strengthened across the board. This added to gains initiated by the Bank of England (BoE) after minutes showed policymakers expect slack in the British economy to dissolve within a year.
Although European data erred towards the side of negativity, the shared currency appreciated on Thursday. The advance can be attributed to speculation that the Eurogroup meeting in Riga tonight will see Greece make progress towards unlocking aid. Additionally, a positive account of the European Central Bank’s (ECB) most recent policy meeting aided the common currency uptrend.
The US Dollar, meanwhile, softened after Federal Open Market Committee (FOMC) minutes were generally dovish. Mixed results from domestic data publications have seen the US asset hold losses versus many of its rivals.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4088.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5676.
Pound Sterling (GBP) Exchange Rate Advanced against the Single Currency on Retail Sales
British retail sales bettered estimates in April, which saw the Pound appreciate. On the month, Retail Sales increased by 1.2% in April; 1.0% better than the median market forecast sales growth. In addition, Retail Sales including Auto advanced by 1.2% on the month; bettering the median market forecast of a 0.4% increase in sales.
‘This robust April reading is a great springboard to a strong second-quarter gross domestic product reading,’ said Alan Clarke, an economist at Scotiabank.
An Office for National Statistics (ONS) official said; ‘You’ve had warmer than average weather which has led to consumers bringing forward purchases of summer clothing.’
Euro (EUR) Exchange Rate Forecast to Edge Higher against the US Dollar despite Poor German Data
Seemingly indifferent to the relatively poor results from European economic data publications, traders have caused the common currency to edge higher versus some of its major peers. The German Composite, Manufacturing and Services PMIs all failed to meet with expected growth.
Speaking about the German flash PMI data, Oliver Kolodseike, Economist at Markit, said; ‘May’s flash PMI results signalled a further slowing in economic growth in Germany’s private sector. Companies reported weaker expansions in both output and new orders, with some survey participants commenting on weak demand, economic uncertainties and rising cost pressures. Indeed, input costs increased at the sharpest rate in over two-and-half years as companies faced a combination of unfavourable exchange rates, rising staff costs and higher oil prices.’
The shared currency appreciation can be attributed to hopes that the Eurogroup meeting in Riga will see greater progress made towards Greece unlocking financial aid. The appreciation can also be linked with the ECB’s account of the most recent monetary policy meeting, which showed policymakers were pleased with the quantitative easing program initiated in March.
US Dollar (USD) Exchange Rate Forecast to Hold Losses Across the Board on Mixed Ecostats
US data produced mixed results on Thursday which caused the US Dollar to soften versus many of its most traded competitors. Of particular detriment was greater-than-expected Initial Jobless Claims, lower-than-expected manufacturing growth and a large decline in Existing Home Sales.
Commenting on the flash Manufacturing PMI data Markit’s Chief Economist Chris Williamson said; ‘Manufacturers reported their weakest growth since the start of 2014 in May, with the survey results adding to fears that the strong Dollar is weighing on the US economy and hitting corporate earnings. Although falling only modestly, export sales have now dipped for two straight months, something not seen for two years and a far cry from the solid export performance seen this time last year. Overall order books are consequently growing at the slowest rate seen since the start of last year.’
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the parameters of 1.3949 – 1.4099.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5522 – 1.5700.
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