GBP/EUR & GBP/USD Exchange Rates Forecast To Climb On Weak US GDP & German Jobs Data

April 30, 2014 - Written by John Cameron

STORY LINK GBP/EUR & GBP/USD Exchange Rates Forecast To Climb On Weak US GDP & German Jobs Data

The Pound to Euro (GBP/EUR) and Pound to Dollar (GBP/USD) exchange rates are forecast to struggle in the short term following the publication of tame German jobs numbers and alarmingly poor Q1 US GDP numbers released earlier today.

The main event in the global currency markets this afternoon has been the publication of a shockingly poor set of Q1 GDP data from the US. The figures revealed that the vast American economy had only expanded by a paltry annualised amount of 0.1% during the three months to the end of March. The counterpart Q4 2013 number showed at 2.6% and economists had been anticipating only a slight drop-ff due to the weather, with 1.2% being the consensus expectation. Nobody had been expecting the result to be quite as devastatingly poor as the year-on-year showing of 0.1% however. The news has propelled the Pound US Dollar exchange rate up to as high as 1.6868 GBP/USD earlier.

The real threat now, as far as investors holding Dollar-denominated assets are concerned, is that the Federal Reserve’s FOMC policy committee, which makes its latest policy announcement this evening, will look at this figure and decide that it needs to stall its Quantitative Easing taper which it embarked upon just before last Christmas. Such an action would be likely to hit the GBP USD exchange rate hard, sending the pair up through the 1.7000 level.

Other highlights on the day have been the latest Canadian monthly GDP data, (published at the same time as the US version), and this morning’s German unemployment data. The Canadian growth data revealed that ‘the other North American economy’ had grown by an annualised 2.6% once again during February. The Loonie has lost ground against Sterling in spite of the release, sending the Pound Canadian Dollar exchange rate up to as high as 1.8505 GBP/CAD earlier, as market participants concentrate on the disappointing US GDP number. Meanwhile, this morning’s German jobs numbers showed a weak level of job creation in the giant Teutonic economy – a factor which may suppress the Pound euro exchange rate moving forward GBP/EUR.

The current Pound Sterling to Dollar / Euro exchange rates are:

- The Pound Sterling to Euro exchange rate is trading up +0.13% at 1.21848 GBP/EUR.
- The Pound Sterling to US Dollar exchange rate is trading up +0.19% at 1.69075 GBP/USD.

Last updated: 01/05/2014 11:45

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