GBP/EUR – British Pound Advances ahead of Cameron Speech
After sliding earlier in the week in response to lacklustre UK employment data, the Pound Sterling to Euro exchange rate rallied by around 0.8% on Thursday amid hopes that Prime Minister David Cameron will be successful in persuading EU member states to back his request to reform the UK’s relationship with the European Union. This was mainly the result of positive comments from European Commission President Jean-Claude Junker, who stated that he believes a deal can be made. However, there are still a number of EU nations that have reservations, so the outcome of the EU Summit could provoke significant GBP volatility. Looking ahead, there will be a number of potentially influential UK releases due over the coming week, although the outcome of this evening’s EU referendum is likely to overshadow domestic ecostats. Perhaps the most significant UK ecostat over the coming week will be Thursday’s fourth-quarter Gross Domestic Product.
GBP/USD – ‘Cable’ Rallies as Market Sentiment Stabilises
The Pound Sterling to US Dollar exchange rate advanced by around 0.5% during Thursday’s European session. While dovish meeting minutes from the Federal Reserve initially weighed on ‘Greenback’ demand, the US Dollar edged higher versus a number of its major peers today after domestic data produced mostly positive results. Of particular significance was Initial Jobless Claims which unexpectedly declined from 269,000 claimants to 262,000 in the week ending February 13th. Looking ahead, market sentiment is likely to play a strong hand in US Dollar movement over the coming week. With that said, there will be a number of US releases which should provoke USD volatility. Those include: Tuesday’s Consumer Confidence, Thursday’s Durable Goods Orders, Friday’s Advance Goods Trade Balance, fourth-quarter Gross Domestic Product and Core Personal Consumption Expenditure.
USD/GBP – Forecast to Fluctuate on Political Uncertainty
With so much uncertainty surrounding the EU referendum and Federal Reserve policy outlook, it is difficult to forecast USD/GBP movement. Several analysts agree that both assets have room to depreciate, but global stock volatility will likely continue to weigh on trader risk-appetite. In this scenario the USD/GBP conversion rate could appreciate significantly. However, if PM David Cameron manages to garner support for EU reforms the Pound could go on a bullish run.
EUR/USD – Euro Forecast to Extend Losses on Dovish ECB
The Euro to US Dollar exchange rate softened by around -0.4% on Thursday. The single currency declined versus the majority of its most actively traded peers after the publication of minutes pertaining to the most recent European Central Bank (ECB) policy meeting. The minutes were particularly dovish, which suggests that the central bank will look to ease policy in March. Of next week’s ecostats for the Eurozone particular attention should be given to Friday’s German Consumer Price Index for February. Low inflation has been one of the main factors driving ECB policymakers to consider policy easing, so CPI data out of the currency bloc’s most influential nation should cause Euro volatility.