After British data produced less-than-ideal results the Pound Sterling (GBP) edged lower versus the Euro (EUR) and the US Dollar (USD)
Despite the fact that British Retail Sales data eclipsed expectations on both a monthly and annual basis in November, the GBP softened versus all but commodity-correlated currencies.
The depreciation can be linked to speculation of long-term delays to tighter Bank of England (BoE) policy outlook.
The Euro edged higher versus its peers despite a dovish Economic Bulletin from the European Central Bank (ECB). The fractional single currency uptrend can be linked to hopes that the gradual pace of Federal Reserve tightening will give the ECB’s program of quantitative easing time to affect positive Euro-area growth.
Despite the fact that US data produced mostly weak results the ‘Greenback’ (USD) continues to appreciate off the back of the first benchmark rate hike from the Federal Reserve in nine years.
Before we continue, here are the live Sterling currency rates for your reference:
On Tuesday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.857
The live inter-bank GBP-EUR spot rate is quoted as 1.166 today.
FX markets see the pound vs us dollar exchange rate converting at 1.256.
FX markets see the pound vs australian dollar exchange rate converting at 1.896.
The GBP to NZD exchange rate converts at 2.09 today.
Please note: the FX rates above, updated 7th May 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
As traders awaited British retail sales data, the Pound softened versus most of its major peers.
The depreciation can be linked to ongoing concerns that the slow pace of wage growth will see the Bank of England (BoE) delay a benchmark interest rate hike for a considerable time.
After the Federal Reserve hiked the overnight cash rate for the first time in nine years the GBP/USD exchange rate dropped below the 1.50 support level.
Meanwhile the euro edged higher versus some of its peers thanks to expectations that the Fed’s plan of gradual policy tightening will give the European Central Bank’s (ECB) stimulus program time to improve Euro-area economic conditions.
Having seen subdued trade for the pound sterling, euro and US dollar exchange rate complex today with traders looking ahead to tonight’s Federal Reserve interest rate decision, the outcome is likely to provoke market volatility.
The Pound Sterling is also likely to see movement tomorrow in response to Retail Sales and CBI Trends data.
The euro should be impacted by German IFO Business Climate, Current Assessment, and Expectations reports, whilst the US Dollar is likely to see changes in response to domestic labour market data.
Despite the fact that British unemployment declined unexpectedly in October, the British Pound exchange rate continues to hold fractional declines versus the Euro and US Dollar.
In the main, however, market trade remains quiet which is likely to continue until the time of the Federal Reserve interest rate decision and accompanying press conference.
If Fed Chairwoman Janet Yellen warns that policy tightening will be gradual there is the potential for the US Dollar to decline versus its major peers.
After British wage growth failed to meet with expectations the Pound to Dollar exchange rate softened.
The GBP also declined against the Euro after November’s Eurozone consumer prices bettered estimates.
However, trade has been comparatively subdued on Wednesday morning with traders eagerly awaiting tonight’s Federal Open Market Committee (FOMC) interest rate decision.
Pound Sterling Exchange Rate Outlook: British economic data produced a mixed-bag of results today.
Whilst October’s Employment Change and Unemployment Rate saw better-than-forecast results, Jobless Claims Change saw 3,900 new benefits claimants which is significantly higher than the market consensus of 800.
However, perhaps the most disappointing British data publications were Average Weekly Earnings and Weekly Earnings ex Bonus which saw wage growth slow well beyond expectations in October.
"The average monthly pace of increase in wages has ground to a halt in the last few months," said Alan Clarke, an economist at Scotiabank. “The economy is robust, jobs growth is strong, but there is no wage inflation. This report is dovish since it shows the pressures on domestically generated inflation as lacking – reinforcing the case for Bank Rate to stay on hold for even longer."
Pound Sterling to Euro Exchange Rate Edges Lower after Eurozone Inflation Bettered Estimates
Despite also producing mixed domestic data results today the shared currency advanced versus most of its peers. The appreciation has been significantly slowed, however, with market trade subdued ahead of the key FOMC interest rate decision which has the potential to impact on the Euro.
Of particular support to the Euro was November’s Eurozone Consumer Price Index which came in at -0.1% on the month, bettering estimations of -0.2%. On the year, November’s Eurozone Consumer Prices advanced to 0.2% despite predictions inflation would hold at 0.1%.
“Despite the small rise in inflation, Euro area prices remain subdued, keeping pressure high on the European Central Bank that has unveiled new policy measures to fight low inflation on Dec. 3,” stated Reuters reporter Francesco Guarascio.
Pound to Dollar Exchange Rate Holds Losses ahead of FOMC Decision
Although most traders expect the Federal Open Market Committee to vote to increase the overnight cash rate today, the US Dollar has failed to post a significant appreciation.
This suggests that traders believe that Fed Chairwoman Janet Yellen will use cautious rhetoric in the corresponding press conference.
Should the Fed hike the cash rate but warn on the gradual pace of future hikes there is the potential that the US Dollar could decline versus its currency peers.
As of Wednesday morning the GBP/USD exchange rate edged lower by around -0.2% to trend in the region of 1.50.