The Pound to Euro exchange rate has recovered yesterday's losses and has seen a 0.11pct gain on Friday morning, trading at 1.23365 GBP/EUR. The Pound to Dollar exchange rate is trading down 0.12%pct at 1.68460 GBP/USD, in comparison to yesterday's close of 1.68663. Data releases later today should provide some US Dollar and Euro exchange rate volativity and include German's Ifo Business Climate (May) and the US's New Home Sales (April)
On Thursday, Pound Sterling (GBP) exchange rate has sustained some losses against the major currencies, such as the US Dollar, Euro, Australian and Canadian Dollars despite the UK GDP figures matching expected forecasts. The first-quarter UK GDP data showed output grew by 0.8pct and 3.1pct as year-on-year.
Thurday's figures show the Pound Australian Dollar exchange rate is trading down -0.3% at 1.82427 GBP/AUD, the Pound Canadian Dollar exchange rate is trading down -0.15% at 1.84170 GBP/CAD, the Pound Euro exchange rate is trading down -0.11% at 1.23361 GBP/EUR and the Pound Sterling to US Dollar exchange rate is trading down -0.12% at 1.68764 GBP/USD.
Wednesday: The British Pound Sterling (currency:GBP) remained in the ascendancy on Tuesday, with the Pound to Euro exchange rate rising to a fresh 16 month high of 1.2312 GBP/EUR and the Pound to Dollar exchange rate maintaining the recent momentum with support working at 1.6850 GBP/USD. The latest UK headline consumer price inflation report was slightly stronger-than-expected at 1.8%, from 1.6% previously, which was the first increase since July 2013. There was an impact from the Easter timing as transport costs increased, while the underling readings were generally unchanged and producer prices lower-than-expected.
The Pound Sterling to Euro exchange rate is trading up +0.49% at 1.23477 GBP/EUR (as of 23:00 GMT 21/05/2014)
Pound to Dollar pushed higher
Overall, the data reinforced expectations that consumer price inflation was largely under control and still well below the government’s 2% target, negating the need for an interest rate increase any time soon. The Pound Sterling (currency:GBP) initially pushed higher against the Dollar (USD) following the data before a swift reversal on a reassessment of the day. The latest Bank of England MPC minutes will be watched closely this morning for further evidence of any divisions forming within the committee and any splits on the likely timing of a rate increase. The out-going Deputy Governor Charles Bean stated that there was uncertainty over the amount of spare capacity within the UK economy. Markets will also be watching out for any comments on the Pound’s strength.
Euro to Dollar dips below 1.37 EUR/USD
The Euro came under additional selling pressure against the majors, with the Euro Dollar exchange rate dipping below 1.37 EUR/USD to find a good level of support. There was solid buying support at lower levels with a recovery back to the 1.37 area. There were further strong expectations that the ECB would sanction policy easing at the June meeting and further discussion surrounding the potential for negative deposit rates. The latest PMI data will be watched very closely on Thursday and any indications of a fresh downturn would increase pressure on the ECB for more aggressive action.
There will also be speculation that capital inflows into the Euro-zone will falter, especially as peripheral yields have risen significantly from recent lows. The Regional Fed member Plosser stated that interest rates may need to rise sooner-than-expected, but he is on the hawkish side of the FOMC. The Fed minutes are also released later today and markets will be looking for any further evidence on underlying thinking within the Fed.
Data Released 21st May
EU 09:00 Current Account (March)
U.K 09:30 Retail Sales (April)
EU 15:00 Flash EC Consumer Confidence (May)
Pound Sterling / Euro / Dollar Foreign Exchange Rates Today (Updated 23/05/2014)
The Pound Sterling to Euro exchange rate is trading up +0.02% at 1.23562 GBP/EUR.
The Pound Sterling to US Dollar exchange rate is trading down -0.13% at 1.68447 GBP/USD.
The Euro to Pound Sterling exchange rate is trading down -0.02% at 0.80931 EUR/GBP.
The Euro to US Dollar exchange rate is trading down -0.15% at 1.36326 EUR/USD.
The US Dollar to Euro exchange rate is trading up +0.15% at 0.73354 USD/EUR.
The US Dollar to Pound Sterling exchange rate is trading up +0.13% at 0.59366 USD/GBP.