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Pound Exchange Rate Forecast: GBP/EUR, GBP/CAD, GBP/AUD Climbing

May 15, 2018 11:21 am | Modified September 4, 2018 7:18 am
AUD, CAD, EUR, GBP | BY Ashleigh Fox

The Pound had a poor start to Tuesday, but began to perk up slightly and limit losses as the session went on. At the time of writing, the Pound to Euro (GBP/EUR), Pound to Canadian Dollar (GBP/CAD) and Pound to Australian Dollar (GBP/AUD) exchange rates are all trending higher.

Pound Offered Little Support as UK Wage Growth Disappoints

The UK’s latest labour market data showed the Unemployment Rate remained at 4.2%, while the Employment Change figure overshot forecasts to come in at 197K in the three months through March. However, the Average Weekly Earnings figure fell from 2.8% to 2.6%, which did little for the Pound.

Professor of Economics at Lancaster University Management Geraint Johnes commented:

‘This is a disappointing result, in that it represents a fall from the 2.8% figure achieved in February, and it means that we have to wait still longer for real wages to recover. The single month measure shows a year-on-year growth of just 2.3% This continued flatness in wages provides justification for the Bank of England’s decision not to raise interest rates – despite the buoyancy of the employment figures, the recovery in the labour market is quite simply not there, and rising wages clearly present no threat in terms of inflation.’

Investors Eye Slowing Eurozone Data – EUR Exchange Rate Sensitive

GBP/EUR has slipped between lows of 1.1335 and highs of 1.1370 so far in today’s session, currently trending in-between at 1.1362. It’s been a bit of a disappointing day for the Eurozone after new economic data suggested a slowdown in the currency bloc could be taking place as some have suggested. The bloc’s largest economy, Germany, showed economic growth halved in the first quarter to only 0.3%, below the 0.4% forecast. Meanwhile, Eurozone Gross Domestic Product (GDP) as a whole remained at 2.5% on the year as expected after expanding by 0.4% on the quarter.

The latest German ZEW Expectations Survey contracted by -8.2 in May, while the Eurozone Economic Sentiment Survey picked up from 1.9 to 2.4. The Pound to Euro (GBP/EUR) exchange rate has been trading at highs of 1.1370 and lows of 1.1335.

Canadian Dollar Awaiting Inflation Data

Meanwhile, the Canadian Dollar was offered some support last week when oil prices hit a three-and-a-half-year high. The Canadian Dollar to US Dollar (CAD/USD) exchange rate hit a three week high on Friday, but domestic data created some Loonie weakness later in the session.

This Friday could be another interesting day for the CAD exchange rate with the release of the latest Canadian Inflation Rate number. Additionally. Canadian Retail Sales stats will also reach markets. It’s expected that the April inflation reading will come in at 0.3%, while the annual figure is expected to remain stable at 2.3%. So far in today’s session the Pound to Canadian Dollar (GBP/CAD) exchange rate has been trending between lows of 1.7323 and highs of 1.7372.

Update (14:48 pm): The Canadian Existing Home Sales stat contracted in April, coming in at -2.9%. March had shown a more positive 1.3% and economists had expected 0.4%. The Pound advanced against the Canadian Dollar (GBP/CAD), Euro (GBP/EUR), and Australian Dollar (GBP/AUD) as the session went on, climbing between 0.10-0.20%.

RBA Releases Cautious Minutes – AUD Lower

The Reserve Bank of Australia (RBA) released its latest meeting minutes which were more cautious than markets were expecting. The central bank drew attention to a few concerns surrounding tightening bank lending standards and some economic fundamentals.

The Australian Dollar exchange rate could experience some movement on Wednesday when the latest Westpac Consumer Confidence data will be revealed, as well as Wage Price Indexes. Thursday will probably be the most influential day in terms of economic data with the Australian Unemployment Rate and Employment Change numbers scheduled to print.

The Pound to Australian Dollar (GBP/AUD) exchange rate has been trading between 1.7982 and 1.8048.

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