Foreign Currency Predictions: Sterling Euro GBP EUR Exchange Rate Forecast Higher on UK GDP Data

July 28, 2015 - Written by Ben Hughes

STORY LINK Foreign Currency Predictions: Sterling Euro GBP EUR Exchange Rate Forecast Higher on UK GDP Data

FOMC Decision Looming, Conversion Rate Fluctuations for USD/GBP, USD/EUR Expected

On Tuesday the Pound gained on both the Euro and US Dollar following the publication of the UK's second quarter growth data. The 0.7% quarter-on-quarter growth print met forecasts and proved that the UK economy recovered from the slowdown seen at the beginning of the year. During the North American session the FOMC is set to deliver its interest rate decision. Hawkish comments would be US Dollar-supportive while dovish remarks would weigh on the 'Greenback'.

Earlier...

Interest Rate Speculation Driving EUR, USD, GBP Exchange Rate Movement this Week

Investors' focus has fallen on the likely future monetary policy moves from the world’s leading central banks this week thanks to tomorrow evening’s fast-approaching US Federal Reserve FOMC policy announcement.

This morning’s UK growth data, which showed that domestic per-capita GDP has recovered to its pre-crisis level for the first time since the 2008 / 2009 credit crunch, has served to stoke investors’ expectations that the Bank of England will be hiking the Base Rate sooner rather than later. However, analysts suggest that such a move would not leave the Old Lady of Threadneedle Street isolated.

Prospect of BoE Interest Rate Hike Drives Pound Sterling (GBP) Conversion Rate Higher after UK GDP

Leading credit ratings agency Standard & Poor’s put out a note from their senior economist Tatiana Lysenko earlier forecasting that, ‘over the next 18 months, we expect tightening of monetary policy in Turkey and South Africa - the countries with large external deficits that are vulnerable to a reversal in global capital flows.’ She went on to predict that, ‘in Latin America, we expect both Brazil and Mexico to tighten monetary policy, albeit for different reasons.’

In spite of this, the majority of economists feel that the threat of an increase in UK interest rates will support the Pound Sterling moving forward. Nevertheless, some analysts remained unconvinced by today’s British growth numbers due to the manufacturing output element of the official statistics. The figures revealed that domestic factory output contracted by a worrisome 0.3% during the three months leading up to the end of last month. Hardly the kind of numbers the new Conservative government would have been looking for given their open desire for a more-balanced UK economy.

Greek Negotiations Could Inspire Euro (EUR/GBP, EUR/USD) Uptrend if Third Bailout is Granted

Meanwhile, talks between Greek officials and the EU / ECB / IMF ‘Troika’ began in earnest earlier today.

The debt-addled Hellenic state’s policymakers were making the right noises, with Deputy Finance Minister Dimitris Mardas stating this morning that, ‘whatever there is to learn from the meetings you will learn from the coordinators of the negotiation on the part of the government... We are informing [them] and giving the information that is needed so that the negotiations move normally.’

Investors remain far from convinced and the Pound Sterling euro exchange rate spiked to an intraday high of 1.4137 GBP EUR a short time ago.

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TAGS: Currency Predictions Euro Forecasts Euro Pound Forecasts Pound Ster Forecasts