Gains Forecast For Pound Dollar Exchange Rate (GBP USD); Pound to Euro Exchange Rate Suffers Losses

Modified: Tuesday, 4 February 2014 11:04 BST - Written by John Cameron

STORY LINK Gains Forecast For Pound Dollar Exchange Rate (GBP USD); Pound to Euro Exchange Rate Suffers Losses

Strong eurozone manufacturing data, published during the early part of yesterday’s session, hurt the Sterling euro exchange rate (GBP/EUR), causing the pair to trade down by over 1.00% just after the London share market close. The PMI survey of the manufacturing sector of the euroland economy showed at 54.0, slightly ahead of December’s print of 53.9. Anything over 50 for a PMI survey indicates a sector which is expanding, so yesterday’s number provided grounds for encouragement regarding a pickup in the mainland European economy.

Pound Euro Exchange Rate Low May be Short-Lived

Recent assertions from European policymakers have suggested that their economy has well and truly shifted away from the damaging credit crunch induced recession which has plagued it for most of the time since 2008. GBP EUR’s downward move to close below the psychologically key 1.2000 threshold may prove to be short-lived given that the latest European Central Bank policy announcement is looming large on the horizon. An announcement from the ECB on Thursday that it is set to further reduce its deposit facility from its current level of 0.00% would surprise few analysts but would be guaranteed to grab headlines in the currency markets.

Elsewhere, yesterday afternoon’s January US ISM Manufacturing survey proved to be hugely disappointing, printing at 51.3 versus expectations of a result of 56.0. The development means that the combined activity levels of America’s manufacturing industries is teetering on the edge of contraction – bad news for investors holding USD-denominated assets who were hoping for sizeable cuts to Quantitative Easing from the Fed in coming months. The data suggests that the US economy may not be ready for such an action just yet.

FED Asset Purchase Scheme Stalling Could Send Pound Dollar Exchange Rate Up

Looking ahead, this afternoon’s comments from Federal Reserve policymaker Evans in Detroit have the potential to further alter the trajectory of the Pound Dollar exchange rate. Any suggestion of a stalling of the Fed’s asset purchase scheme would be likely to send Cable back up above the 1.6500 GBP/USD threshold once again.

Important Pound Sterling, Euro & US Dollar Exchange Rates (Updated: 11:00 GMT 04/02/2014)

The Pound Sterling to Australian Dollar exchange rate is trading down -1.38% at 1.83846 GBP/AUD.
The Pound Sterling to Euro exchange rate is trading up +0.19% at 1.20833 GBP/EUR.

The Pound Sterling to US Dollar exchange rate is trading up +0.13% at 1.63303 GBP/USD.
The Euro to Australian Dollar exchange rate is trading down -1.57% at 1.52149 EUR/AUD.
The Euro to Pound Sterling exchange rate is trading down -0.19% at 0.82759 EUR/GBP.
The Euro to US Dollar exchange rate is trading down -0.06% at 1.35148 EUR/USD.
The US Dollar to Australian Dollar exchange rate is trading down -1.51% at 1.12580 USD/AUD.
The US Dollar to Euro exchange rate is trading up +0.06% at 0.73993 USD/EUR.
The US Dollar to Pound Sterling exchange rate is trading down -0.13% at 0.61236 USD/GBP.

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