UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.1% on Wednesday morning, whilst the Pound Sterling to US Dollar (GBP/USD) exchange rate also declined by around -0.1%.
As traders await UK labour market data, with focus on wage growth reports, the Pound Sterling softened versus most of its currency rivals. The depreciation is a continuation of the downtrend initiated yesterday following less-than-ideal inflation data.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in he region of 1.2815.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4286.
Yesterday…
Pound Sterling to Euro (GBP/EUR) Conversion Rate Predicted to Dive as Cameron Attempts to Hash Out EU Reform Deal
The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.7% on Tuesday afternoon.
Amid speculation that Prime Minister David Cameron will not be successful in convincing European Union members to back reforms, the Pound softened versus most of its major peers. With Cameron due to outline his proposal in Brussels on Thursday, the prospect of rejections could really bolster arguments for leaving the EU. Also weighing heavily on demand for the Pound today was mixed results from UK inflation data. Although the annual Consumer Price Index met with expectations of a 0.3% rise in January, the monthly reading contracted by more than expected. What’s more, the core inflation measure failed to meet with the median market forecast 1.3% with January’s result only hitting 1.2%.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2840.
Meanwhile the Euro has seen dramatic price swings today. Initially opening the European session in a weak position, slightly better-than-expected results from economic sentiment surveys helped the currency reverse losses. As the session progressed further the Euro gained versus many of its peers amid renewed demand for financer assets as global stock volatility weighs on risk-appetite. Both the German and Eurozone ZEW Economic Sentiment Surveys showed a marked drop in confidence, but the actual results were still better than had been forecast.
Pound Sterling to US Dollar (GBP/USD) Conversion Rate Predicted to Plunge on Hopes Weak Global Growth will Not Deter Federal Reserve
The Pound Sterling to US Dollar (GBP/USD) exchange rate contracted by around -1.0% on Tuesday afternoon.
In response to the British inflation data, Howard Archer at IHS Global Insight said; ‘The weakness in oil and commodity prices means that consumer price inflation will likely remain extremely low for longer. Furthermore, recent additional price cut initiatives announced by both Asda and Morrisons indicate that the supermarket pricing war is continuing. Consumer price inflation will likely hover around 0.3% in the near-term, before gradually trending up in the second half of the year. It currently looks unlikely to get up to 1.0% until the fourth quarter of 2016. We expect inflation to then trend gradually higher to reach the Bank of England’s target rate of 2.0% late on in 2017.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4311.
With trader risk-aversion strategies returning amid significant global stock volatility the US Dollar advanced versus many of its peers. Even Euro strength wasn’t enough to offset USD gains. The North American asset also found support in response to mounting hopes that the Federal Reserve will not be deterred from hiking the overnight cash rate irrespective of global economic conditions. ‘Unless the economy rolls over, there is still a very high likelihood of at least one rate hike this year,’ said Sam Bullard, senior economist at Wells Fargo.
Pound Sterling (GBP) Exchange Rate Forecast: Earnings Data in Focus
Given recent trends and the lack of influential ecostats to alter markets, the Pound Sterling is likely to hold losses versus its major peers for the remainder of Tuesday’s European session. Wednesday should see significant GBP volatility, however, with the publication of several labour market reports. Of particular significance will be wage growth data because low wages have been one of the main reasons the Bank of England (BoE) have kept monetary policy ultra-accommodative.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.2791 to 1.2994.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.4300 to 1.4516 during Tuesday’s European session.
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