The British pound to dollar rate (GBP/USD) sustained its recent trend higher last week, leading top forecasters to call for a trend reversal. Sterling lost a bit of momentum before the Bank Holiday weekend, falling back towards 1.27 versus the Euro, after reaching highs of 1.29+ through the course of the week.
Today's currency exchange investors find the British pound to dollar exchange rate trending lower at just short of 1.45 after another disappointing UK data release.
The UK Construction PMI fell short of market forecasts, sending the sterling exchange rates weaker across the board.
With the construction and manufacturing PMIs already suggesting weakness in the UK economy, Pound Sterling has been softened further after an announcement by Next raised concerns over retail and consumer spending.
The company has widened its sales forecasts for the 2016-17 year, cutting its upper growth forecast and deepening the range of potential losses from -1% to -3.5%.
April’s Markit Manufacturing PMI has seriously undermined the recent British pound to dollar exchange rate gains after showing a surprise contraction in the manufacturing sector.
The GBP/USD spot rate plunged after the PMI was expected to show a minor acceleration in the growth rate to 51.2, but instead the index fell to 49.2, while March’s reading was revised down to 50.7.
The British pound has dropped notably against the US Dollar over the course of the day, partly due to US announcements.
These beneficial revelations have included the ISM New York Index, which has risen in April from 50.4 to 57. Additionally, the IBD/TIPP economic optimism results for May has climbed from 46.3 to 48.7.
The British pound kept momentum against a struggling US Dollar though and has made gains through 1.47 over the weekend, after the EUR/USD exchange rate pair hit a high above 1.15 for the first time in a year.
Invariably, the Pound’s performance will be dictated by swings on EUR/USD and a weak Dollar against the Euro will usually translate to a weak Dollar against everything else.
With the move on Tuesday, the Pound Sterling (GBP) exchange rate has erased its 2016 losses against the Dollar and that’s despite almost two months left of uncertainty about whether the UK will vote to leave the EU.
The Pound has now recorded its first back-to-back monthly gain versus the Dollar since 2013, in a move traders say reflected the lower perceived probability that Britain will vote out of Europe on June 23rd.
Other Pound Sterling / Currency Exchange News
Latest Pound/Euro Exchange Rates
On Saturday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The live inter-bank GBP-GBP spot rate is quoted as 1 today.
At time of writing the pound to euro exchange rate is quoted at 1.16.
The live inter-bank GBP-CHF spot rate is quoted as 1.126 today.
Please note: the FX rates above, updated 20th 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.
Pound Sterling (GBP) Exchange Rate News and Outlook
There has certainly been renewed vigour for the “IN” campaign over the past few weeks and that is certainly reflected in the latest polls, which show a healthy lead for those wishing to remain in the common market.
Of course, we all know that polls often tell a different story but that is all we have to go on until the referendum next month.
The Pound has hit the highest level against the Dollar since December, completing a third week of gains, even as data last week showed that UK consumer confidence dropped to the lowest in more than a year.
The Pound has also shrugged off reports that growth in the UK economy fell by a third during the first quarter of the year.
The preliminary GDP data showed growth at 0.4%, compared to 0.6% in the final three months of 2015. Yet, the Pound continued to recover and it’s becoming a familiar theme.
The fundamentals are playing less of a role in market movement and swings in risk sentiment and political anxiety has been the focus.
Eurozone Growth Accelerates at a Faster Pace than US and UK
It could easily be argued that the stream of negative economic reports is becoming a positive for Sterling because it is creating greater concern about the economy stalling, which would only worsen should the UK leave the EU.
The first quarter growth data in the UK and the U.S was disappointing but the Euro-zone data was particularly appealing to investors. Growth increased 0.6% on the quarter, much better than the 0.1% increase in the U.S and year-on-year, the gap between the Euro-zone and the U.S is closing rapidly.
The UK and the U.S grew 2.1% and 2% respectively, compared to 1.6% in the Euro-zone.
In 2014, the Euro-zone economy expanded just 0.9%, compared to growth of 2.9% in the UK and 2.4% in the U.S. The Euro-zone was technically in recession as recently as 2012 and 2013 and the legacy of this is unemployment over 10%, double that of the U.S and the UK.
However, slowing growth rates in the U.K and the U.S means that the Euro-zone is accelerating now at a faster pace and that in turn is having a very positive impact on the resurgent Euro.
GBP,USD,EUR Related Data Released Tuesday 3rd May 2016
U.K 09:30 CIPS/Markit Manufacturing PMI (April)
EU 10:00 PPI (March)
Leading GBP/USD Exchange Rate Forecasts
Lloyds note the key levels for the major pound to dollar exchange rate trend:
"On the topside, we have been highlighting 1.4865-1.49 as a key area of resistance, so a move through here is needed to suggest the 30-year support level between 1.40 and 1.35 has again held and that the market will gradually work back towards 1.60 in the coming 6-12 months."