Foreign Exchange Rates Outlook - Euro to Dollar Firmer, Pound Sterling Strengthens

Modified: Sunday, 15 June 2014 13:45 BST - Written by David Woodsmith

STORY LINK Foreign Exchange Rates Outlook - Euro to Dollar Firmer, Pound Sterling Strengthens

Foreign Exchange Rates Outlook: The Euro (EUR) held onto yesterday’s gains against the US Dollar (USD) exchange rate on Friday as yesterday’s mixed data releases out of the world’s largest economy to weigh upon the ‘Greenback’.

Thursday saw the USA’s labour department report that the number of US citizens filing for initial jobless claims benefits in the week ending on June 7th increased unexpectedly by 4,000 to bring the total to 317,000. Economists had been expecting a fall of 3,000.

A separate report released by the US Commerce department showed that retail sales in the US rose by 0.3% last month, falling short of the expected increase of 0.6%. The lukewarm data did little to inspire confidence that the world’s largest economy is making a strong recovery. Instead analysts now expect that the US is continuing to struggle to shake off the impacts of the winter’s extreme weather.

As a result the Euro exchange rate (EUR) was able to tick higher. Investors will now be focusing on the afternoons US economic data releases.

The US Dollar (USD) exchange rate is also under pressure from the situation in Iraq as concerns grow that the US could get involved militarily to help the beleaguered Iraqi government halt the advance of Islamist fighters in the country.

President Barack Obama said that he hasn’t ruled out the use of airstrikes in the country. Clashes are continuing between Iraqi forces and members of ISIS in the city of Tikrit only 80 miles from the Iraqi capital of Baghdad.

“I don’t rule out anything because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either Iraq, or Syria for that matter,” Obama said after a meeting with Australian Prime Minister Tony Abbott at the White House.

Later in the day, the U.S. was to release data on producer price inflation and preliminary data on consumer sentiment from the University of Michigan.


The Euro Pound exchange rate (EUR/GBP) weakened to a 19-month low as comments made by Bank of England Governor Mark Carney suggested that the UK Central Bank could introduce an interest rate hike as soon as the end of the year.

“There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect,” said Mark Carney at a gathering at the Mansion House in the City of London yesterday.

In an annual address held in the centre of London's financial district, Bank of England Governor Mark Carney said Thursday that interest rates in the U.K. could rise sooner than investors expect, citing a recent economic growth spurt.

"We and most analysts had come in expecting a repetition of recent dovish comments," said Steve Englander, currency strategist Citigroup adding that he now remains constructive on Sterling and expects to see more gains against the Euro.

Data released out of the Eurozone did little to offer support to the single currency as figures released by Eurostat showed that the Eurozone’s trade surplus widened less than forecast to €15.7 billion. Analysts had been expecting an increase to €16.7 billion.

There was some positive news for the region as a report showed that retail sales in the Netherlands rallied strongly in April on a yearly basis. Sales increased by 3.4%, well ahead of the previous month’s figure which showed a decline of -1.9%.

Latest Pound exchange rate values as of 15th June 2014

The Pound Sterling to Australian Dollar exchange rate is trading value +0% at 1.80527 GBP/AUD.
The Pound Sterling to Canadian Dollar exchange rate is trading value +0% at 1.84206 GBP/CAD.
The Pound Sterling to Swiss Franc exchange rate is trading value +0% at 1.52731 GBP/CHF.
The Pound Sterling to Euro exchange rate is trading value +0% at 1.25306 GBP/EUR.
The Pound Sterling to New Zealand Dollar exchange rate is trading value +0% at 1.95831 GBP/NZD.
The Pound Sterling to US Dollar exchange rate is trading value +0% at 1.69700 GBP/USD.

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