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Pound, Euro, US Dollar, Exchange Rate Forecast: BoE and Non-Farm Payrolls

May 3, 2019 6:00 am | Modified May 2, 2019 4:52 pm
EUR, GBP, USD | BY Lauren Bessent

This week’s Bank of England (BoE) meeting was highly anticipated as markets wanted to gauge central bank hawkishness in an attempt to guess when further interest rate hikes might take place.

Bank of England (BoE) Leaves Rates on Hold, Upgrades Growth Forecast

It’s no surprise the BoE’s Monetary Policy Committee (MPC) chose to keep interest rates on hold once again, given the state of Brexit, but markets were keen to see any changes to the growth and inflation forecasts.

The BoE now sees UK Gross Domestic Product (GDP) growth reaching 1.5% in 2019, an upward revision from the former 1.2% forecast. The Bank of England commented on the first quarter growth, expected to be confirmed at 0.5%, but also suggested this was due to pre-Brexit day stockpiling.

The central bank said:

‘That boost is expected to be temporary, however, and quarterly growth is expected to slow to around 0.2% in Q2. Smoothing through those developments, the underlying pace of GDP growth appears to be slightly stronger than previously anticipated, but marginally below potential.’

The Pound hit highs of 1.3080 against the US Dollar (GBP/USD) in Thursday’s European session, while reaching levels of 1.1670 against the Euro (GBP/EUR).

Today’s Pound, Euro, US Dollar Exchange Rate Forcast

In the day ahead, there are several developments which could influence the Pound to Euro and Pound to US Dollar exchange rates. In terms of UK data, Markit will release it’s April Services and Composite Purchasing Managers’ Indexes which may offer some moderate influence on the Pound. However, Brexit developments will continue to influence the British currency as UK politics continue on their shaky path.

Meanwhile in the US, it’s a big day for economic data, with prints like the Advance Goods Trade Balance, Change in Non-Farm Payrolls, Unemployment Rate, and the ISM Non-Manufacturing/Services Composite. With so much high-tier data due out in today’s session, there’s plenty of opportunity for USD exchange rate fluctuation.

The Euro on the other hand, could experience a surge in popularity if the currency bloc’s inflation readings spring higher as forecast. The Core Consumer Price Index is expected to increase from 0.8% to 1.0% in April on the year, while the non-core measure is forecast to jump from 1.4% to 1.6%.

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