The British Pound Rates Benefited Yesterday from a Stabilization in the Worldwide Stock Market
Despite the fact that Asian stock prices plunged yesterday, pound sterling (GBP) advanced as US and European markets stabilized, partly thanks to the People's Bank of China's (PBoC) increased efforts to control liquidity.
Since the turn of the year the US Dollar vs euro exchange rate has strengthened considerably thanks to optimism that the US economy is gaining momentum.
All eyes will be looking towards the Federal Open Market Committee (FOMC) interest rate decision due for publication during the North American session. Markets are divided as to the path of further interest rates, although the consensus is that the next meeting will see no change.
Here are the latest fx rates as a reference:
On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The pound conversion rate (against pound) is quoted at 1 GBP/GBP.
The pound conversion rate (against us dollar) is quoted at 1.237 USD/GBP.
The GBP to AUD exchange rate converts at 1.928 today.
Please note: the FX rates above, updated 19th Apr 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.
European and U.S stock markets recovered earlier losses on Tuesday, after earlier dropping by as much 2% at the open following another dramatic decline in Asian share prices.
The Shanghai Composite Index lost 6.4% on Tuesday but the threat of contagion was contained as the price of crude oil edged higher towards $32 a barrel.
Russia is the latest oil-producing nation to hint that it may be willing to work towards cutting production if other global producers cooperate, although it has since backtracked on its comments.
The British Pound also benefited from a later stabilization in the stock market, rising through 1.3220 against the Euro, while the UK currency made gains towards 1.43 versus the U.S Dollar.
The UD Dollar exchange rate complex has been overwhelmingly strong in the market at the start of this year, amid optimism that the U.S economy is gaining momentum as the Fed looks to increase interest rates at a steady pace through 2016, after raising for the first time in December.
FOMC Interest Rate Decision to Drive Market Volatility Today, US Dollar Exchange Rates Predicted to Fall if Fed Proves Dovish.
However, the global financial turmoil that has engulfed markets at the start of the year is threatening to derail the FOMC outlook for growth and inflation and there are some suggestions the Fed may not raise rates as consistently this year as previously forecast.
That would in turn provoke a spate of US Dollar selling and all eyes will be on the FOMC statement this evening with no change expected to policy this month.
Recent fed futures prices show that the markets no longer anticipate further tightening in March, although the Federal Reserve has not indicated that it will not change monetary policy then.
Data in the U.S disappointed on Tuesday with the latest services PMI data coming in below expectations, further adding to the challenge by the FOMC on how to manage expectation with monetary policy.
Pound Sterling GBP Outlook Negative as Oil Prices Continue to Decline
Sterling has found relief in the past few trading days but the outlook still tells a pretty grim story with expectation that oil prices could plunge below $20 a barrel this year and escalating concerns over the continual volatility in financial markets. That had led to forecasts that the Pound could slip towards 1.30 against the U.S Dollar, which would take GBP/EUR well into the 1.20s.
Data on Thursday this week is expected to show modest growth in the fourth quarter of 2015 but this could be constrained by fears over China’s economy and an EU referendum. We will get a general idea of the resilience of the UK economy in the face of stuttering global markets with GDP growth expected to come in at 0.5% for the final three months of 2015.
Data Released 27th January
U.S 15:00 New Home Sales (December)
U.S 19:00 FOMC Interest Rate Announcement