GBP/USD Pairing Set to Fluctuate After Significant Data Releases; Euro (EUR) Debate Continues
The GBP/USD pairing, currently trading at 1.7135, will be subject to fluctuation this week with influential data releases on Thursday.
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The US will release the meeting minutes from June’s meeting at 18:00 GMT on Wednesday which could encourage a boost for the ‘Buck’.
Meanwhile the Pound has softened against the ‘Greenback’ after a disappointing week by way of data releases.
Disappointing UK Industrial and Manufacturing Production data came to light on Tuesday, which was unpredicted by economists and consequently caused a sharp dip for the Pound.
Wednesday however saw Halifax House Prices fall as well; MoM they fell to -0.6% far below the forecast -0.3% and very disappointing in comparison to the former 4.0% figure.
Meanwhile the Euro is subject to debate this week with talks amongst economists for the need to quell the ‘crazy’ Single Currency.
Representative for HSBC, Bob Lynch, stated: ‘The ECB is also concerned about the EUR, but they view it from a somewhat different perspective, one of its impact on monetary conditions and pressuring inflation lower, rather than its outright impact on competitiveness. Nonetheless, with the EUR continuing to hold at reasonably high levels, and not all that much lower than when ECB President Draghi first hinted at more earning in early-May (roughly 1.3900), the pressure to take more action against the currency persists.’
It appears that in the current global economic climate, central banks are attempting to talk down their currencies to enable better exporting potential, and stronger long term gains.
Glenn Stevens recently attempted to jawbone in reference to the Australian Dollar, however his attempt seems to have been proven futile as the ‘Aussie’ only dipped for a short period and has been slowly gaining since.
Wednesday could prove to boost the Pound if the UK data released is favourable. The UK is awaiting Trade Balance data, alongside the Bank of England Asset Purchase Target, and the Bank of England Interest Rate Decision.
As UK interest rate hikes have proven to be hot topic in the economic market in recent weeks, it is hoped that Thursday will provide some clarity from the former mixed messages from the Bank of England.
MP Pat McFadden previously criticised the Bank of England stating: ‘We’ve had a lot of different signals. One day hot, one day cold, and the people on the other side of the message are left not really knowing where they stand.’
Although the Pound has been able to gain in 2014, the US Dollar is set to Rally, causing potential for the GBP/USD exchange rate to fall, however Thursday should provide some insight into the future of the pair.