Corrective trading sees Pound Sterling (GBP) exchange rates recover despite the complete absence of domestic data.
Having declined for eight-consecutive days against the US Dollar, the Pound advanced versus most of its major peers.
The appreciation can be linked to traders taking advantage of the Pound’s comparatively low trade weighting.
Additional Sterling exchange rate gains can be linked to speculation that the Eurozone economic recovery will reduce the Pound’s overvaluation and pressure the Bank of England (BoE) into hiking the benchmark interest rate.
Here are the latest forex rates as a reference:
On Saturday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.858
The pound conversion rate (against euro) is quoted at 1.165 EUR/GBP.
The pound conversion rate (against norwegian krone) is quoted at 13.645 NOK/GBP.
The pound conversion rate (against swedish krona) is quoted at 13.536 SEK/GBP.
At time of writing the pound to danish krone exchange rate is quoted at 8.696.
NB: the forex rates mentioned above, revised as of 4th May 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Analysts at Hang Seng Bank predict that the BoE will hike the Cash Rate ahead of expectations despite ‘Brexit’ headwinds, what does this mean for the Pound Sterling (GBP) exchange rate?
Despite a complete absence of domestic data to provoke volatility on Monday, the British Pound advanced versus most of its currency peers. The appreciation can be linked to traders taking advantage of Sterling’s comparatively low trade weighting after significant declines seen last week.
In accordance with analysts at Hang Seng Bank, the Bank of England will likely hike rates in 2016 thanks to improvement in Eurozone economic outlook.
‘With an improving performance of the European economy, the UK’s major export market, worries that the Pound will be excessively strong if the BoE raises interest rates are likely to be a much less significant factor this year. This also supports higher UK interest rates. It is expected that the Pound could face headwinds in short term from a strong Dollar and “Brexit” challenges. But the outlook of the currency remains positive. We remain cautious on GBP/USD in 1Q due to the uncertainty of “Brexit” with year-end target at 1.5200.’
Swedish Krona (SEK) Exchange Rate Softens Today amid Speculation of Riksbank Intervention
Similarly to that of the UK, there is a complete absence of Swedish economic data on Monday. Unlike Sterling, however, the Swedish Krona declined versus most of its currency rivals.
The SEK depreciation can be linked to speculation that Riksbank will intervene in order to bolster inflation and lower the Krona’s trade weighting. Analysts at EconoTimes stated:
‘There are two possibilities that Riksbank may undertake. Either the bank intervenes in FX market to prevent SEK appreciation or actively puts the SEK on a depreciating trend. But according to our view, to depreciate the currency is not on the table in recent time. Hence, we stick to the view that the Riksbank will have to cut the repo rate somewhere in first half of the year.
Norwegian Krone (NOK) Dives Today as Oil Prices Extend Losses
Norwegian economic data produced poor results on Monday which caused the Krone to dive versus nearly all of its major peers. December’s Inflation and Core Inflation measures both failed to meet with expectations, with core consumer prices dropping into negative territory.
Also weighing heavily on demand for the Krone is falling oil prices. Analysts at Morgan Stanley predict that crude will fall as low as $20 a barrel thanks to US Dollar strength.
‘Given the continued US Dollar appreciation, $20-$25 oil price scenarios are possible simply due to currency,’ the analysts wrote in the report. ‘The US Dollar and non-fundamental factors continue to drive oil prices.’
The only other Norwegian release to be aware of this week is the nation's trade balance figures for December. That nation's trade surplus is believed to have widened from 15.4 billion Norwegian Krone to 17.5 billion Norwegian Krone.
On Tuesday the UK Pound struggled against the majority of its currency counterparts as British Industrial and Manufacturing Production data disappointed expectations. The figures capped off a run of less-than-impressive reports for the UK which indicate that the rate of expansion in the nation was slow in the forth quarter of 2015.