The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates were trading rather bullishly in Wednesday’s European session as Greek Prime Minister Alexis Tsipras met with Russian President Vladimir Putin and investors awaited the Federal Reserve meeting minutes.
Meeting with Russian President, @PutinRF_Eng ahead of this afternoon's press conference. #Greece pic.twitter.com/iLUizVPLp2
— Alexis Tsipras (@tsipras_eu) April 8, 2015
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate leapt higher in Tuesday’s European trading while the Pound Sterling to Canadian Dollar (GBP/CAD) and Pound Sterling to US Dollar (GBP/USD) exchange rates were trending within a narrow range.
The Pound Sterling exchange rate experienced choppy trading in the first half of Tuesday’s European session when Markit’s UK Services and Composite Purchasing Managers Index (PMI) were released alongside the Bank of England’s (BoE) Financial Policy Committee (FPC) statement.
BoE Greek Fallout Warning Pressures Pound Sterling (GBP) Exchange Rate Lower
The Bank of England suggested that the fallout from ongoing Greek negotiations could be damaging for UK banks and suggested that institutions need to ready themselves for both a continuation in the lethargic progress as well as the possibility of an entire Greek exit from the Eurozone.
The FPC stated: ‘The committee judged that, were Greece and its Euro area partners to be unable to reach an agreement, more significant effects could arise.’
Additionally, the FPC warned about the damage a high current account deficit could create and that while no immediate action needed to be taken, banks could ‘quickly become less resilient to stress’ if persistent.
Meanwhile, the UK saw the release of a favourable Markit Services Purchasing Managers Index (PMI), which jumped from 56.7 to 58.9 in March.
Industry expert Samuel Tombs stated: ‘March’s UK Markit/CIPS report on services provides further reassurance that the economic recovery is still on a fast track despite the uncertainty created by the upcoming general election.’
Barclays have warned that the general election is likely to be the most dominant threat to the Pound Sterling exchange rate this year.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
Meanwhile, all eyes are on Greek negotiations this week as Prime Minister Alexis Tsipras flies to Russia to meet with President Vladimir Putin.
The meeting initially scheduled for May has been brought forward to this week on request of the Greek government, causing speculation over the agenda to heighten. The meeting was re-scheduled when it appeared that talks between Greece and Germany were hitting a dead end and therefore some experts have suggested Greece could turn to Russia for financial aid.
#Greece a lot of wary western diplomats in Athens on eve of #AlexisTsipras visit to the kremlin for talks with #vladimirputin
— Helena Smith (@HelenaSmithGDN) April 7, 2015
Tuesday saw Sentix’s Eurozone Investor Confidence rise to an eight-year high when it jumped to 20.0 in April from the previous month’s 18.6.
US Data Sinks US Dollar (USD) Exchange Rate
The US Dollar exchange rate has experienced a rough few trading days as a result of weaker-than-forecast US data.
Economists had predicted a massive 245K Change in Non-Farm Payrolls figure to emerge on Friday; however, the actual ecostat resided much lower at 126K. Things continued to worsen on Monday when the ISM Non-Manufacturing Composite slipped from 56.9 to 56.5.
Tuesday is unlikely to offer the US Dollar exchange rate much support with the only the US Consumer Credit stat due for release.
The Canadian Dollar has been extremely sensitive to oil price changes in recent months and Tuesday saw WTI crude slip -0.47 lower. However, Monday had witnessed a massive 5% jump in oil prices as investors attempted to evaluate how quickly Iran would be able to increase oil exports after a nuclear deal was sketched out last week.
Analyst Phil Flynn commented: ‘People betting on Iran’s oil arriving tomorrow realise they may have to wait up to a year.’
Friday’s expected to be a massive day for Canadian Dollar exchange rate movement with the release of Canadian Unemployment Rate and Net Change in Employment figures.
Pound Sterling Exchange Rate Forecast: GBP/CAD, GBP/USD, GBP/EUR
The GBP/CAD, GBP/USD and GBP/EUR currency pairs are likely to experience some movement on Thursday when the Bank of England (BoE) announces its latest interest rate decision.
Moreover, any hawkish central bank comments throughout the week could send the Pound Sterling exchange rate higher, while any dovish tones are likely to pressure GBP lower.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is reaching 1.8592. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4903. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3707.
