The Pound Sterling to Euro (GBP/EUR) exchange rate is trending within a narrow range on Friday morning.
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.28%.
After surging versus the majority of its most traded currency rivals on Thursday, the Pound softened on Friday. The initial drop was as a result of traders locking profits after Thursday’s appreciation opened up some attractive selling positions. The downtrend was further extended after domestic data failed to impress.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3555.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5371.
Pound Sterling (GBP) Exchange Rate Softens on Profit Locking
Mounting speculation that the Bank of England (BoE) will lead the way with regards to hiking rates has seen the Pound strengthen considerably. This notion was bolstered by minutes from the most recent Federal Open Market Committee (FOMC) meeting, which showed Fed policymakers remain cautious when it comes to hiking rates.
When coupled with positive domestic data, Thursday’s surge was significant. This opened up attractive selling positions as traders sought to lock profits. Naturally, this initiated Friday’s downtrend which has been fuelled by less-than-ideal data results.
Of particular disappointment was the UK’s Retail Sales data, which declined despite cool oil prices. Year-on-year Retail Sales including Auto was forecast to rise from 4.0% to 5.9%, but the actual result only reached 5.4%. On a monthly basis, Retail Sales incl. Auto declined beyond expectations, dropping -0.3% in January following the previous month’s 0.2% gain. Additionally, Retail Sales excluding Auto was forecast to drop by -0.3% on the month, but the actual result was a decline of -0.7%.
Despite the disappointing results, many economists predict rejuvenated sales as the year progresses. ‘The prospects for retail sales and consumer spending overall for 2015 currently look bright, given significantly improving real earnings growth, rising employment and elevated confidence,’ said Howard Archer, chief European and UK economist at IHS Global Insight.
Lloyds Bank retail managing director Keith Richardson said: ‘As retailers try to get back to normal after several months of promotions-driven sales, the message from shoppers is clear: heavy discounts are the new norm.’ Mr Richardson added: ‘Retailers and consumers have overdosed on a diet of Black Friday, Boxing Day and early January sales. They are due a hangover.’
Pound Sterling (GBP) Exchange Rate Forecast to Hold Losses
Having appreciated significantly of late, and with traders locking profits, the Pound Sterling is likely to hold losses versus the majority of its most traded currency rivals. With that being said, however, positive sentiment towards the BoE could see the Pound gain over the course of the weekend.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a range of 1.3545 to 1.3619.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was moving between a range of 1.5348 and 1.5434 on Friday.
