British Pound to Euro (GBP/EUR) and US Dollar (GBP/USD) Exchange Rates Tumble
If you're looking to make an international money transfer, we recommend TorFX.
The Pound has only reached session highs of 1.6955 against the ‘Buck’ whilst currently trading near the low point of today’s session thus far, at 1.6926. Conversely the GBP to EUR exchange rate has traded between the boundaries of 1.2625 and 1.2641.
The weakness in the Pound follows positive US data releases, coupled with the International Monetary Fund (IMF) stating that Sterling was overvalued.
The IMF said: ‘Staff estimates that the current account balance is 2.6% weaker than its equilibrium level, and that the real exchange rate is overvalued by about 5-10%.’
Furthermore, the Pound rallied to great heights in recent months following Governor for the Bank of England Mark Carney’s hawkish remarks about interest rate hikes happening sooner than expected.
Since then, however, the Bank of England has been more formal in their approach, claiming that interest rate hikes would be slow and gradual and potentially not as close as some expected.
This week however has seen the IMF statement offer support to the Bank of England’s decision to maintain current rate levels.
Representative of the British Chambers of Commerce John Longworth stated: ‘This reinforces the case against the Bank of England making any hasty decisions on raising interest rates.’
Furthermore, industry experts believe the Pound will lose the gains it’s previously made, until interest rate hike conversations become more of a reality. However, this will lend support to UK exporters that will be able to attain higher profit values from their merchandise, a worry that surfaced into some of the largest brand names such as Burberry.
An expert in the field Bill O’Neill commented: ‘The Pound has come a long way and it appears to be topping out. Long Pound-Dollar positions have gone from being a contrarian view in the summer of last year to being pretty much a consensus. A lot of good news about the UK is already in the price.’
With the US Dollar appearing to rally ahead of other majors, the Pound is likely to continue to depreciate in the GBP to USD exchange rate, as the US economy produces favourable figures.
The Pound to US Dollar exchange rate pairing will see fluctuation this week with a highly influential week for the US ahead, including the Federal Open Market Committee meeting held today to discuss monetary policy.
The US will publish Mortgage Applications, Employment Change, and Gross Domestic Product figures on Wednesday which could all encourage the US Dollar to rally higher.
The UK, however, published Mortgage Approvals data on Tuesday that impressed, rising by an unpredicted 67.2K; economists had only forecast a rise by 63.0K. However, with the recent IMF statements and the US Dollar’s popularity, the Pound remained bearish.
The UK will be quiet by way of data publication in the latter half of this week, with only Manufacturing PMI on Friday that may prove influential.
The Pound will be affected by the US Dollar’s movements in the currency market to determine any further movement in the GBP to USD exchange rate. The US Dollar is presently trading up against the Pound at 0.5906.