Pound Sterling Forecast: GBP/EUR, GBP/USD Exchange Rates Struggling before UK Inflation Data

BoE Policymaker Hints at Rate Hike but Pound Sterling (GBP) Exchange Rates Dip

Although Bank of England (BoE) policymaker Gertjan Vlieghe supported hopes for a rate hike yesterday, the Pound failed to derive much support from his remarks.

Sterling edged lower against the Euro (GBP/EUR) despite Vlieghe suggesting that accelerating wage growth will support higher borrowing costs.

Pound exchange rates could struggle again today, particularly if the UK’s upcoming inflation report shows that consumer price pressures eased by more than anticipated in January.

As it stands, the rate of non-core inflation is forecast to dip from 3.0% to 2.9%.

Euro (EUR) Exchange Rates Higher Despite German Coalition Uncertainty

The Euro advanced on majors like the Pound (EUR/GBP) and US Dollar (EUR/USD) yesterday despite concerns surrounding the German coalition deal.

Data from the Eurozone is in short supply today so investors will be looking ahead to tomorrow’s run of ecostats, including German inflation figures and the Eurozone’s fourth quarter growth report.

Upbeat results could give the Euro a mid-week boost.

US Dollar (USD) Exchange Rates Down on Global Stock Market Recovery

As a new week of trading got underway, an uptick in global stock markets depleted demand for the US Dollar.

Although the Federal Reserve is expected to hike interest rates in March, that fact has already been priced into the US Dollar and is unlikely to push the currency higher over the next few weeks.

The next high-profile US data – the nation’s inflation report – isn’t due for publication until tomorrow. Both core and non-core annual inflation is expected to dip. The US will also be releasing advance retail sales figures, with the rate of consumer spending including autos believed to have eased on the month.

Canadian Dollar (CAD) Exchange Rates Down on OPEC Production Forecasts

With the latest OPEC production forecasts weighing on expectations for the price of oil, Canada’s key commodity, Canadian Dollar exchange rates stumbled on Monday.

If oil prices remain depressed the Canadian Dollar may struggle to gain any traction over the next couple of days, particularly in light of the lack of Canadian data due out.

Australian Dollar (AUD) Exchange Rates Fluctuate even as Confidence Rises

Australian Dollar (AUD) exchange rates fluctuated after Reserve Bank of Australia (RBA) Assistant Governor Luci Ellis warned that it could take a while for wage growth to pick up.

Ellis also voiced concerns over the resilience of consumption growth, stating: ‘[Australia] had especially strong employment growth over the past year – more than double the rate of growth in the working-age population. But that hasn’t translated into strong consumption growth. Household income growth has been weak for a number of years, and that has weighed on consumption growth.’

While these comments weren’t particularly cheery, NAB’s Business Conditions and Confidence indexes both showed improvement. The conditions measure improved from 13 to 19 while the confidence index edged up from 10 to 12.

New Zealand Dollar (NZD) Exchange Rates Fail to Benefit from Increase in Credit Card Spending

Robust credit card spending data for New Zealand and rising risk appetite failed to lift New Zealand Dollar exchange rates yesterday.

Speculation that the Reserve Bank of New Zealand (RBNZ) will leave interest rates on hold for the foreseeable future is currently keeping NZD restrained.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

Contact Adam Solomon