British Pound to US Dollar, Euro to American Dollar & New Zealand Dollar Exchange Rate Forecasts Today and Analysis 2014 / 2015

July 27, 2014 - Written by David Woodsmith

STORY LINK British Pound to US Dollar, Euro to American Dollar & New Zealand Dollar Exchange Rate Forecasts Today and Analysis 2014 / 2015

Currency News UK presents our British Pound to US Dollar, Euro to American Dollar & New Zealand Dollar Exchange Rate Forecasts Today and Analysis 2014 / 2015 - The start of the week was relatively devoid of any major data releases and as such Monday and Tuesday saw fairly muted trade. A knock to global risk sentiment as a result of the shooting down of a passenger airliner over eastern Ukraine also weighed upon the foreign exchange market.

On Tuesday the US Dollar to euro exchange rate advanced to a multi-month high as the diverging policy positions of the Federal Reserve and European Central Bank continued to weigh heavily upon the single currency. The USD also found support from data which showed that inflation in the world’s largest economy increased in June.

Midweek the Pound Sterling (GBP) was softened following the release of the Bank of England’s July policy meeting minutes. Investors were widely disappointed after the minutes revealed that the Banks policy makers voted unanimously in favour of leaving interest rates unchanged at the record low level of 0.5%. Policy makers highlighted weak wage growth as the main cause for their hesitation.

“The weakness of wages in the face of strong rises in employment was becoming more striking…an unexpected increase in interest rates when real wages were not yet rising could lead to an outsized reaction in asset prices and destabilise the recovery,” said the minutes.

BoE Governor Mark Carney also gave a speech in Glasgow later in the session and investors looking for any hawkish comments regarding the UK economy were left largely disappointed.

The US Dollar meanwhile was little changed against a number of peers but was trading close to an eight-month high against the Euro. The Dollar to Euro currency pair eased slightly after data showed that Germany’s manufacturing and service sectors showed improvement this month.

The currency then strengthened broadly after data released in the afternoon showed that the number of Americans claiming unemployment benefits fell more than forecast. The number of claimants in the week ending on July 19 fell by 19,000 to 284,000. The data was better than analyst expectations for a rise of 5,000.

The positive data increased speculation as to when the Federal Reserve will begin to tighten its monetary policy.

New Zealand Dollar Softens vs Sterling as RBA Increase Interest Rates:

On Thursday the Pound to New Zealand Dollar made solid gains after the Reserve Bank of New Zealand raised interest rates but warned that no more rate rises will occur this year. The Pound to Euro's early gains however were short-lived as the latest retail sales data for the UK came in below economist forecasts.

Sales were forecast to rise by 3.9% year on year; instead they increased by 3.6%. Positive data out of the Eurozone and United States also weighed upon the UK currency.

As the week came to a close on Friday the Pound Sterling managed to recover some ground against the US Dollar, Euro and other peers after a report released by the Office for National Statistics showed that the UK economy is back to pre-financial crisis levels. The data showed that the economy is now 0.2% ahead of its pre-crisis peak. On a year on year basis GDP increased by 3.1%. Sterling received further support after the International Monetary Fund forecasted that the UK will be the fastest growing G7 economy.

The US Dollar was on course to make a second weekly gain against the Euro and make further gains against over peers.

Key events for the GBP/USD exchange rate next week:

Monday July 28th – USD – Markit Services PMI, Pending home sales

Tuesday July 29th – GBP –Mortgage lending, USD – CB Consumer confidence

Wednesday July 30th – USD –ADP employment change
USD- GDP data
USD – Federal Reserve interest rate decision

Thursday July 31st – GBP – Consumer confidence
USD – Jobless claims data
Friday August 1st - GBP –Markit manufacturing PMI
USD – Nonfarm payrolls data

Euro Continues to Fall vs Pound Sterling Exchange Rate - Update 28/07/2014

The Euro to Pound exchange rate remained weaker after data released on Friday showed that Germany’s Ifo business climate index fell in July. Concerns over the Eurozone economy and the European Central Bank’s diverging monetary policy with other major banks is also continuing to weigh on sentiment for the currency.

The Pound to Dollar rate remains under the 1.70 level but was little moved on Monday due to a lack of market moving domestic data releases. The ‘Greenback’ meanwhile continued to find support from last week’s data releases and increased demand for safer assets as concerns over the conflict in Gaza heightened over the weekend.

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