The Pound Sterling to US Dollar (GBP/USD) exchange rate firmed to its best level in 3-days on Wednesday as market attention focuses on an emergency meeting of European Finance Ministers that could end or worsen the Greek crisis.
GBP/USD Exchange Rate Hit a session high of 1.530
Sterling continued to receive support from the previous session’s positive economic data releases, which included better than forecast, retail sales growth, a surprise rise in manufacturing production and an upwardly revised GDP estimate by the National Institute of Economic and Social Research (NIESR).
The Pound Sterling was strengthened after the Office for National Statistics reported that U.K. manufacturing production rose 0.1% in December, compared to expectations for a 0.1% downtick. November’s figure was revised to a 0.8% increase from a previously estimated 0.7% rise.
Further gains for the Pound against the US Dollar are expected to be limited however as markets remain jittery over Greece’s uncertain future in the Eurozone. Attention will also focus on peace talks being held in Minsk.
The leaders of France, Germany, Russia and Ukraine are set to meet in an attempt to end the violence, which has cost over 5,000 lives. Fighting in war torn eastern Ukraine continues to escalate as both sides attempt to gain as much ground as possible.
In the latest bout of fighting, more than 20 people have been killed. Nineteen Ukrainian soldiers died in fighting in the strategically important transport hub of Debaltseve. More casualties were also reported in Donetsk.
The markets and the wider world are hoping a deal can be reached but if that does not happen then fears will rise that the West will provide weapons to Kiev and the fighting will escalate further.
With a lack of economic data releases due from the UK, Europe and USA, trading is expected to be relatively muted in today’s session. The focus will be on the Greek and Ukrainian situations as well as on commodity price movements.
End of Week Data to Create Volatility for GBP/USD Exchange Rate
Thursday promises to be a more active day however as the Bank of England will release its latest inflation report and retail sales and jobless claims data is due out of the US.
The Pound is forecast to soften against the US Dollar on Thursday as many economists expect the BoE inflation report will show that the UK will experience a period of deflation over the coming months, as oil prices remain low.
