GBP/EUR – British Pound Ticks Higher on Manufacturing Production
British economic data produced mostly positive results on Wednesday which allowed the Pound to edge higher versus its major peers. January’s Industrial Production eclipsed forecasts, with the result actually showing 0.2% growth. On the month, however, industrial production came in slightly lower than expected. January’s Manufacturing Production bettered the market consensus on both a monthly and annual basis. However, February’s NIESR Gross Domestic Product Estimate came in at just 0.3%, a slight drop from the previous figure of 0.4%. Sterling gains were restrained however as ‘Brexit’ concerns kept the currency under pressure.
GBP/USD – Risk-on Trading sees ‘Cable’ Edge Higher
The US Dollar softened versus most of its major peers as the week continued. The depreciation can be linked to heightened demand for high-yielding assets thanks to intervention from the People’s Bank of China (PBoC). Concerns that the poor condition of global economic health will cause the Federal Reserve to delay a benchmark interest rate hike for some time to come has also aided the Dollar depreciation. With high-profile UK and US data limited this week, it will take external developments to trigger much in the way of GBP/USD movement.
USD/GBP – Forecast to Rally on ECB Rate Decision
The primary focus for traders this week will be Thursday’s European Central Bank (ECB) interest rate decision. If the central bank ease policy significantly, as has been forecast by the majority of traders, the corresponding Euro depreciation could cause the US Dollar to surge. Additionally, aggressive ECB easing would cause traders to pull away from the Euro which should lend support to the British Pound.
EUR/USD – Euro Forecast to Dive as ECB Expected to Ease
The vast majority of analysts expect the ECB to ease policy tomorrow. Whether by cutting the overnight cash rate, expanding asset purchases or combining both; the central bank need to intervene in order to alleviate deflationary pressures in the currency bloc. There is a strong chance that the Euro will dive significantly in response to stimulus measures given that traders have been reluctant to price-in policy easing after they overestimated intervention in December.