Optimistic growth forecast boosts GBP rally against greenback

Optimistic growth forecast boosts GBP rally against greenback

 Sinduja Venkat

Good morning and welcome to today’s foreign exchange market commentary on 15th of May. 

Here are MyCurrencyTransfer.com’s top 5 currency highlights:

  • GBP rallies well on optimistic growth forecast
  • Euro continues to swim in the red against greenback
  • USD advance may be put on hold ahead of Producer data
  • Nikkei rises over 15000; Japanese economy yet to find its feet
  • NZD loses ground post retail sales data

 

CURRENCY RATES OVERVIEW 

GBP/EURO – 1.1808
GBP/USD – 1.5212
GBP/CHF – 1.4774
GBP/CAD – 1.5511
GBP/AUD – 1.5396
GBP/ZAR – 14.1117
GBP/JPY – 156.0136
GBP/HKD – 11.8073
GBP/NZD – 1.8522
GBP/SEK – 10.1461

 

Mid-market rates as of 2013-05-15 10:24 UTC

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Key releases in the next 24 hours that may affect currency date:

 

Australia: No Data
Europe: No Data
United Kingdom:  GBP Bank of England Inflation Report
New Zealand: NZD Business NZ Performance of Manufacturing Index (APR)
United States of America: USD Producer Price Index (YoY) (APR), USD Producer Price Index Ex Food & Energy (YoY) (APR), USD Net Long-term TIC Flows (MAR), USD Industrial Production (APR), USD Manufacturing (SIC) Production (APR)
China: No Data
Canada: CAD Existing Home Sales (MoM) (APR)
Japan: JPY Gross Domestic Product (QoQ) (1Q P), JPY Gross Domestic Product Annualized (1Q P), JPY Nominal Gross Domestic Product (QoQ) (1Q P)

 

GBP rallies well on optimistic growth forecast

 

GBP rallied to 1.5271 against the greenback as the Bank of England (BoE) raised its growth forecast for the U.K. Governor Mervyn King garnered support for BoE by making the statement that it observes a steady, modest and sustainable recovery in Britain at over 2% over the policy horizon. However it is expected that the Monetary Policy Committee will move away from its quantitative easing programme and the central bank will outline its tentative exit strategy over the next few months as this growth story becomes a reality.

 

Euro continues to swim in the red against greenback

 

Euro continued to tumble to fresh monthly lows of 1.2874 against the USD as the Eurozone’s 1Q GDP report indicated decline in growth by  0.3% lower than the forecasted 0.1% decline. Continued struggle from Eurozone to return to conditions of growth puts increased pressure on the European Central Bank (ECB) to do more in terms of quantitative easing and growing support is expected to be gathered for it to purchase Asset-Backed Securities (ABS) in an effort to stimulate growth in the region.

 

USD advance may be put on hold ahead of Producer data

 

USD continued to rally against its peers as was the trend from the beginning of the week, However it is expected that the greenback may consolidate going into the US session of trading following a host of economic data being released today- all of which is expected to dampen the outlook for growth and inflation.

 

A scenario of slowdown in U.S. Producer Prices along with a decline in the levels of Industrial Production may push down the exchange rate as this raises expectations for more Fed support, but overall the USD is expected to stay afloat throughout the day.

 

Nikkei rises over 15000; Japanese economy yet to find its feet

 

Nikkei advanced to new 5 year highs above the 15000 level, following corresponding gains observed on US equity indices.  With regards to key data releases Japan witnessed a decline in Tertiary industry activity levels by 1.3% compared to last month, twice as much as what was expected at 0.6%, growing from the 1.2% previous touted as the worst results in a year indicating that the Japanese economy is finding it hard to regain its strength.

 

NZD loses ground post retail sales data

 

The NZD fell against USD trading at new lows in the 0.8174/80 region. New Zealand retail sales number for the first trimester of the year came below expectations at 0.5% compared to 2.10% in the previous year. On a yearly basis, the print stood at 3.2% as compared to 2.9% last year. Ten of the 15 retail industries in New Zealand had higher sales volumes, as reported by the country’s Bureau of statistics.

 

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