Pound Sterling (GBP) Exchange Rate Gains as Declines Deemed Excessive
The Pound to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2694
Several factors helped the Pound advance against the majority of its currency counterparts on Monday. Firstly, some hawkish comments from Bank of England policymaker Ian McCafferty gave Sterling a boost.
McCafferty asserted that interest rates need to be increased now to stop the erosion of slack leading to inflationary pressures next year.
Further Pound gains were occasioned by speculation that the losses sustained by the currency in recent weeks were excessive. Technical analysis sees Sterling’s downtrend finishing and the currency rallying against rivals like the US Dollar.
In the view of currency expert Harry Adams; ‘The Pound is going to lift over the course of the week given opportunities for fairly normal trading conditions. [The drop] is a big move. It could be a question of it being too far, too fast, so there will be a bit of a relief rally, up to mid $1.63.
Finally, a better-than-forecast Reported Sales figure from the Confederation of British Industry kept the Pound trending higher against rivals like the US Dollar (GBP/USD) and Euro (GBP/EUR).
US Dollar (USD) Exchange Rate Falls after Services Stats
The US Dollar declined against peers like the Pound (USD/GBP) and Euro (USD/EUR) on Monday as investors processed a batch of below-forecast US data.
With the Federal Open Market Committee’s interest rate decision looming, and the end of its quantitative easing cycle in sight, every data release is influential and today’s have failed to make the grade.
Crucially, the US Markit Services PMI for October fell from 58.9 to 57.3. A more moderate decline to 57.8 had been expected.
In a statement issued with the figures Markit economist Chris Williamson noted; ‘The flash PMI survey data show the pace of economic growth easing for a fourth consecutive month in October. The weakened growth of new orders and downturn in business optimism suggest that growth and hiring could slow further in coming months.’
The disappointing result caused the composite index to drop from 59 to 57.4.
US Pending Home Sales also fell short, registering a month-on-month gain of 0.3% instead of the 1.0% increase anticipated.
After the data was published the US Dollar shed over 0.2% against the Pound and almost 0.3% against the Euro.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is currently trending in the region of 0.6214
Euro (EUR) Struggling after IFO Declines
The Euro put on a pretty mixed performance during the local session.
While the common currency softened against a bolstered Pound (EUR/GBP), the Euro was able to advance on a softer US Dollar (EUR/USD) in the wake of less-than-impressive services sector and housing reports from the US.
At the beginning of the European session the Euro derived support from the news that the Eurozone’s banking sector is faring better than many industry experts had anticipated.
However, reports showing steeper-than-predicted declines in Germany’s IFO business confidence, conditions and expectations indexes later put the Euro under pressure.
Tomorrow’s German import price index could have an impact on the Euro’s performance.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.2715
Indian Rupee (INR) Steady amid Lack of Data
For a second week, economic reports from India are in short supply. The direction taken by the Rupee in the days ahead is likely to be dictated by global economic developments.
The Pound to Indian Rupee (GBP/INR) exchange rate rallied by over 0.5% during the European session as Sterling posted widespread gains.
The US Dollar to Indian Rupee (USD/INR) exchange rate was trending in the region of 61.1600 following the publication of disappointing economic reports for the US.
Wednesday’s Federal Open Market Committee interest rate decision and policy announcement could have an impact on the Rupee.
If the FOMC ends its quantitative easing programme, as expected, it will undermine demand for higher-risk and commodity driven currencies and the Rupee could fall.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 98.8910
