Gains Forecast for Pound Sterling against Euro, Losses for GBP CAD

May 27, 2015 - Written by John Cameron

STORY LINK Gains Forecast for Pound Sterling against Euro, Losses for GBP CAD

A slightly stronger than anticipated US Consumer Confidence survey published during yesterday’s session, helped the US Dollar (currency:USD) improve against the Pound Sterling (currency:GBP). The resultant movement saw the GBP USD exchange rate slump to its lowest level since the 7th May, with the pair slumping to an intraday low of 1.5354 during the middle part of the European afternoon session.

US Durable Goods data, published at the same time, showed a significant reduction in comparison to the previous month’s result, printing at -0.5. However, this did not unduly weigh down the Buck as analysts had been expecting such an outcome. The upshot of the raft of American eco stats sent the euro US Dollar exchange rate down to a fresh 4-week low of 1.0873 and the attendant weakness of the single currency also showed itself as a forward move for the GBP EUR exchange rate. The Pound pushed higher to 1.4154 as a result and the next stop moving higher for GBP EUR may come at March’s 7 ½ year peak of 1.4257. Consecutive closes above this level would send out a strongly positive signal for the pair moving forward.

Looking ahead, today’s session brings a lighter data schedule with the highlight coming in the form of the latest Bank of Canada (BoC) monetary policy announcement. The Canadian Dollar (currency:CAD) has taking a beating against Sterling during recent weeks with the pair improving to 1.9187 during the final stages of last week as investors continued to price-in the Pound-positive effects of the clear-cut UK election result of 7th May. Commentators consider a rate hike from the BoC unlikely this month, but the tone of the rhetoric contained in its statement which accompanies the announcement is likely to prove market-moving. Many investors forecast that a comeback could be on the cards for the Loonie following recent data which suggests that the pace of Canadian price rises has remained strong over the past few months in spite of the dip in global oil prices.

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