During the European session the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending around the day’s opening level of 1.5740 while the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate gained over 0.3% to trend in the region of 1.9459.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast – ‘Greenback’ and British Pound Supported by Fed and BoE Interest Rate Hike Speculation
As the week continued the Pound Sterling to US Dollar (GBP/USD) exchange rate continued moving away from the seven-month high of 1.59 achieved last week, falling as low as 1.56.
The US Dollar was able to remain bullish in spite of a concerning US Durable Goods Orders print as the Federal Reserve’s Jerome Powell indicated that two interest rate hikes in 2015 are a possibility.
Powell asserted that he believes the US economy will enjoy stronger economic expansion over the second half of the year, with the situation in the labour market improving and inflation gradually increasing.
He then stated; ‘If those things are realised, I feel that it is time, it will be time, potentially as soon as September [for rates to be revised]. I don’t think the odds are 100%. I think they’re probably in the 50-50 range that we will realise those conditions, but that’s my forecast.’
He added; ‘It seems to be appropriate that we raise rates but do so at a fairly gradual pace. The actual pace is going to be dependent on the path of the economy.’
While these comments boosted the US Dollar, the Pound was also supported by interest rate rhetoric.
Hawkish Monetary Policy Committee (MPC) member Martin Weale increased demand for Sterling when he asserted that UK borrowing costs could be adjusted as early as this summer. Weale has previously voted for immediate rate adjustments and is believed to be one of the two policymakers who have found recent decisions to be ‘finely balanced’.
As highlighted by Bloomberg; ‘Weale’s comments come a week after his colleague Kristin Forbes said UK inflation will probably rebound sharply toward the BOE’s 2% target as the impact of falling oil prices and a stronger Pound fade. Also on June 17, the BOE released minutes of its June meeting in which it said restraints on the economy are waning, while data showed wages are growing at the fastest pace in almost four years.’
Greek Situation Sees EUR/USD, EUR/CAD Exchange Rate Fluctuations Today
Meanwhile, the ongoing discussions between Greece and its creditors remain one of the main causes of currency market movement.
Although Athens has expressed dissatisfaction with the fact that it has been asked to revise reform proposals, again, many industry experts are confident that with the threat of a default rising tonight’s gathering of Eurogroup officials will result in a deal being struck.
The Euro consequently clawed back previous losses against peers like the Canadian Dollar, Pound and US Dollar.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast – ‘Loonie’ Slides as Oil Prices Pressured before US Supply Data
This week’s economic calendar was completely free of ecostats for Canada, leaving Canadian Dollar movement up to global economic developments and commodity price shifts.
On Wednesday the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate advanced to a high of 1.9481 as oil price gains were limited ahead of influential US supply data.
The official inventory data compiled by the US Energy Information Administration could see oil prices climb if it shows the decline in supply expected.
If that proves to be the case, the GBP/CAD pairing could give up today’s gains.
UK CPI Reported Sales, US Services/Composite PMI and Jobless Claims Figures Forecast to Drive GBP/USD, GBP/USD Exchange Rate Movement
While the outcome of today’s Eurogroup gathering is likely to have a profound impact on currency market movement, both the Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Canadian Dollar (GBP/CAD) exchange rates could be subject to fluctuations based on the latest UK and US ecostats.
The Confederation of British Industry’s reported sales number is believed to have fallen from 51 in May to 35 in June, a result which might have a moderately negative impact on the Pound.
The US is set to publish initial jobless and continuing claims figures as well as Personal Consumption Expenditure data and the Markit Services/Composite PMIs.
Any results which support the argument in favour of stronger borrowing costs from the Fed could set the US Dollar trending higher.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5744 while the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in the region of 1.9468
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