Pound Sterling Soars on Recent EU Referendum Arguements

May 23, 2016 - Written by Ben Hughes

STORY LINK Pound Sterling Soars on Recent EU Referendum Arguements

The Pound has jumped against its rivals recently, owing to a positive reception to a recent EU Referendum poll.

The appeal of the Pound has taken a knock lately, likely due to the intensification of EU Referendum news as Purdah approaches.

GBP Exchange Rate Forecast: UK GDP in Focus

Last week’s session brought significant market movement for the Pound Sterling (currency : GBP) against the other major global tenders. This week’s session sees a lighter data roster, but some movement is still forecast; read the thoughts of our specialist data analyst below –

The standout release for Sterling holders this week comes on Thursday morning, with the publication of provisional Q1 Gross Domestic Product data from the UK.

The result is expected to come in at a similar level to the counterpart Q4 2015 print; however, the latest Purchasing Manger Index survey of the services sector of the domestic economy, which showed that combined activity levels in the tertiary industries had dropped to their lowest level since the start of 2013, does not bode well for the GDP figure.

Given that the services sector comprises over three quarters of the British economy, a softer than anticipated showing from the Q1 2016 GDP statistic is highly possible.

Bank of Canada Policy Decision to Provoke CAD Exchange Rate Volatility

Wednesday afternoon’s monetary policy decision from the Bank of Canada (BoC) is also likely to be market-moving. The BoC’s benchmark lending rate currently stands at a rock-bottom 0.50% following a surprise cut earlier this year.

Another loosening of policy from the BoC is considered highly unlikely this week, however comments from the Bank’s Senior Deputy Governor Carolyn Wilkins on 11th May suggested that given recent downbeat forecast for the global economy, the new neutral interest rate for her nation is likely to come in the 2.75% to 3.75% banding.

Any forward guidance to this effect on Wednesday from the BoC could further suppress support for the Canadian Dollar (currency : CAD), potentially propelling the Pound Loonie exchange rate back up towards the two to one threshold.

A brace of data sets from the States dominate the final two sessions of the week. Look for a strong result from Thursday’s US Durable Goods Orders figure and Friday’s US annualised Q1 Gross Domestic Product number to determine the near-term direction of travel for the US Dollar (currency : USD).

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts Pound Ster Forecasts