The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates sank in Wednesday’s European trading after the Office of National Statistics (ONS) announced that UK productivity had fallen by 0.2% in the final quarter of 2014.
The Pound Sterling exchange rate looked ready to rally after an upbeat Markit Manufacturing Purchasing Managers Index (PMI) emerged which showed growth in the sector had hit a eight-month high.
The March index climbed from a negatively revised 54.0 to 54.4, in line with forecasts.
Senior Markit economist Rob Dobson stated: ‘The UK manufacturing sector has continued its bright start to 2015, with March seeing the headline PMI rise to an eight-month high. The sector is on course for output growth ranging around 0.6% over the opening quarter as a whole, a positive contribution to broader economic expansion and its best performance since the first half of last year.’
However, Pound Sterling trading was severely dampened when the ONS revealed the slip in productivity, which remains below pre-crisis levels.
Economist Vicky Redwood commented on the situation, saying: ‘This still isn’t great – productivity has still not even returned to its long-run average rate of about 2%, let alone recouped any of the shortfall relative to its pre-crisis trend.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
Meanwhile, the US Dollar exchange rate has been tentative in what’s expected to be a turbulent week for ‘Greenback’ trading. The US Dollar suffered heavy losses on Tuesday when the Chicago Federal Reserve Purchasing Managers Index failed to jump above 50.0 in March, instead recording a the second consecutive sub-50 reading.
However, US Consumer Confidence did jump far beyond forecasts, hitting 101.3 in March rather than stagnating at 96.4; the February ecostat was also positively revised to 98.8.
However, the rest of the week is expected to see US Dollar exchange rate swings with a wealth of influential US data still yet to come.
Wednesday could be a major day for the US Dollar to Euro (USD/EUR) and US Dollar to Pound Sterling (USD/GBP) exchange rates with the release of ISM Manufacturing and Markit’s Manufacturing PMI.
Another release investors will want to keep an eye on is ADP’s Employment Change stat. The figure can be used to try and forecast the outcome of Friday’s highly influential Change in Non-Farm Payrolls and Unemployment Rate numbers.
Any upbeat labour market data is likely to see the USD/GBP and USD/EUR currency pairs rally.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
The Euro enjoyed support on the back of positively revised final Italian, French, German and Eurozone Manufacturing Purchasing Managers Indexes.
Germany’s index climbed from initial 52.4 forecasts to 52.8 in March. Furthermore, the Eurozone ecostat hit a healthy 52.2 in March after a 51.9 flash prediction.
However, despite upbeat data, the Euro exchange rate is still extremely sensitive to any developments in negotiations between Greece and its creditors.
General feeling is that the Greeks hve still not understood intellectually what it takes in order to reach agrmnt: EU source to @euroinsight
— Yannis Koutsomitis (@YanniKouts) April 1, 2015
Greek and Russian heads are expected to meet next week in what some have suggested is an attempt to strike a financial deal.
Pound Sterling to Euro (GBP/EUR), US Dollar (GBP/USD) Exchange Rate Forecast
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates could be in for further movement on Thursday with the release of Markit’s UK Construction PMI, which is expected to dip from 60.1 to 59.8 in March.
Furthermore, US Factory Orders and Trade Balance ecostats will also be out and could impact the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates.
