The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates both advanced in Tuesday’s European session while the Pound Sterling to US Dollar (GBP/USD) exchange rate remained in a tight range ahead of US confidence data.
The Pound Sterling to Euro (GBP/EUR) exchange rate was initially offered support on Tuesday when investor sentiment in the Euro declined on account of a potential Greek exit from the Eurozone. The nation is attempting to renegotiate its austerity deal, but any long-term agreements seem to be a way off while Greece is speculated to be running out of funds.
If the Tass report is accurate and Tsipras just broke rank with EU, might hint he sees nothing left to lose, i.e. no deal on bailout
— Ilya Spivak (@IlyaSpivak) March 31, 2015
Eyes have turned to next week’s meeting between Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin. The meeting was scheduled for May until Germany and Greece came to loggerheads a few weeks ago and Tsipras brought the meeting forward.
Speculation surrounding the situation has risen dramatically and many expect the topic of financial aid to be discussed—a potential rescue for Greece if the Eurozone talks don’t end well.
Industry expert Simon Tilford commented: ‘This is an attempt to ratchet up the pressure on the rest of the Eurozone to make concessions to Greece.’
If it looks like Greece could seriously leave the Eurozone, the Euro to US Dollar (EUR/USD), Euro to Canadian Dollar (EUR/CAD) and Euro to Pound Sterling (EUR/GBP) exchange rates could all sink.
US Dollar Exchange Rate (USD/EUR, USD/CAD, USD/GBP) Rallies on Fed Rate Hike Prospects
Meanwhile, the US Dollar has remained higher since last week’s Federal Reserve rate hike statements. Fed chief Janet Yellen announced that she believed the US was likely to witness higher interest rates this year—an assurance many economists have been waiting to hear from the horse’s mouth.
Tuesday’s US Consumer Confidence index is expected to remain at 96.4 in March while the Chicago Federal Reserve Purchasing Managers Index (PMI) is forecast to climb from 45.8 to 51.8. Any reading above the 50.0 benchmark denotes expansion and is therefore a favourable result for the US Dollar exchange rate.
Federal Reserve officials are also scheduled to speak throughout Tuesday’s North American session and any hawkish statements could boost the US Dollar to Euro (USD/EUR), US Dollar to Pound Sterling (USD/GBP) and US Dollar to Canadian Dollar (USD/CAD) exchange rates.
Meanwhile, the Canadian Dollar is also awaiting highly influential data with the release of Canadian Gross Domestic Product (GDP) ecostats still to come. The January figure is forecast to fall from 2.8% to 2.4% on the year, which could negatively impact the ‘Loonie’ exchange rate.
The Canadian Dollar to US Dollar (CAD/USD), Canadian Dollar to Euro (CAD/EUR) and Canadian Dollar to Pound Sterling (CAD/GBP) exchange rates have all been sensitive to oil prices after crude took a near 60% tumble since last July.
However, oil could be on the verge of tanking with Iran on the precipice of a deal which would see its export restrictions loosened. Six world powers, including Britain, are attempting to lessen Iran’s nuclear bomb making power in return for fewer international sanctions. If the deal is made, Iran could export more oil and add to the global glut.
Pound Sterling (GBP) Exchange Rate Forecast: GBP/EUR, GBP/USD, GBP/CAD
The Pound Sterling exchange rate was offered some support on Tuesday when UK GDP figures printed more favourably than forecast. 2014’s Q4 recorded a healthy 3.0% annual growth, rather than the flash forecast 2.7%.
Additionally, GfK’s UK Consumer Confidence Survey rose to 4 in March from February’s 1, bypassing the predicted 2.
Economist Howard Archer suggests that with a tighter labour market, increased job opportunities and negligible inflation the ecostat ‘reinforced belief that there is little likelihood that consumers will start to delay purchases in anticipation of falling prices.’
The Pound Sterling to Canadian Dollar (GBP/CAD), Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Euro (GBP/EUR) exchange rates could all experience movement on Wednesday with the release of Markit’s UK Manufacturing Purchasing Managers Index (PMI).
Economists expect the index to climb from 54.1 to 54.4 in March.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is reaching 1.8873. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4785; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3762.
