Pound Sterling Looks to Scotland Vote Results; Euro - US Dollar Variation
Better Together? Pound Sterling, Euro and US Dollar conversion rates all depend on the week ahead. Speculation is set to rule foreign exchange markets and forecasts until the outcomes of this week’s series of key events are known.
Exchange rates:
The pound to US dollar exchange rate: 1 GBP converts into 1.6215 USD.
The euro to US dollar exchange rate: 1 EUR converts into 1.2939 USD
The euro to pound exchange rate: 1 EUR converts into 0.7979 GBP.
International Payments? Don't Get Burnt by the Markets or Your Bank - Ask your FX provider if they have the relevant stop loss order to protect against downside losses and a buy order to take advantage of your best-case rate when reached. In addition, using an independent provider instead of your bank can deliver up to 5% more FX.
GBP Pound: Ruled by Scotland speculation
GBP against the US Dollar fell to its lowest level since November of last year this past week.
Substantial volume rise over the past few weeks has bolstered decline along with new yearly highs in OBV supporting the downtrend.
A daily close over 1.6305 on above average volume is needed to shift near-term bias higher.
Pressure to increase the ‘No’ vote in the Scottish referendum is dominating Westminster discussions.
Polls show the result is too close to call and many undecided voters are being targeted by both the ‘Yes’ and ‘No’ parties.
Impacts of either result look set to upset the Pound Sterling with a loss of confidence and stability in the United Kingdom evident.
Of course a ‘No’ result will bolster confidence in the short-term, however devolution of powers has been promised and it is still unknown how this will affect the connected economies across the UK.
The effect of a ‘Yes’ result will no doubt be negative for the Pound’s strength, until it is better understood how independence will work.
Unfortunately speculation from polls and the news outlets will dominate until Thursday's result is known.
Euro: Bear outlook continues
The Euro against the US Dollar traded at its lowest level since July of last year last week.
Its daily volume has been in a steady rise since July which bolsters the medium-term downtrend.
However, OBV is seeing a minor divergence on the daily and is a potential reversal signal.
A dramatic increase in volume to move through 1.3010 is needed to confirm that a more serious counter-trend move is underway.
Since ECB action the Euro as it has dropped almost 14% from its March highs. But sentiment on the Euro is bearish, so a rebound maybe likely before it moves lower.
US Dollar: Retail up retains Dollar strength
The marked pick up in private sector consumption announced Friday in the August Retail Sales report may encourage the Federal Open Market Committee (FOMC) to normalise monetary policy sooner.
We may also see a growing number of central bank officials adopt a more hawkish tone for monetary policy as the board looks to conclude its asset-purchase programme on 29th October.
The expansion in private sector credit along with wage growth has prompted strong consumption in August, and a better-than-expected print may put increased downside pressure on the Euro against the US Dollar as it raises the outlook for growth and inflation.
However, sticky inflation paired with the slowdown in job growth may drag on household spending, and may prompt a larger correction in the dollar as it limits the Fed’s scope to move away from the zero-interest rate policy ahead of schedule.
