Exchange Rates Today: Euro, British Pound and US Dollar Latest News and Outlook

The euro exchange rate complex was sunk on Thursday while the pound sterling and US dollar saw mixed conditions.

The ECB decision was the big event of the day and it passed by without event. However, the press conference that followed effectively torpedoed the euro. A look at the markets shows:

• The pound euro exchange rate is 0.03 pct higher having attained 1.2239.
• The euro dollar exchange rate is 0.04 pct lower at 1.3835.
• The pound dollar exchange rate is 0.01 pct lower at 1.6940.

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Draghi drives FX volatility

It was all going well for the euro bulls until Thursday afternoon when ECB President Mario Draghi suggested the Bank was comfortable with introducting new EUR-negative easing measures next June.

Draghi said officials would like to see the bank’s new forecasts before acting and that they are “comfortable with acting next time”.

His comment suggest a higher risk of easing at the ECB’s June meeting and have sent the euro tumbling from a 2-month high in choppy trade.

Dennis de Jong, managing director at UFXMarkets, says:

"While price pressures may have eased in recent months the Euro-US dollar exchange continues to rise and the ECB President is likely to call for policy action in order to maintain a healthy balance.

"So far, Mario Draghi has taken a cautious approach, but his resolve will be tested if conditions remain the same."

Bank of England offers no surprises for pound sterling

The Bank of England has also been in focus today, no pro-GBP surprises were sprung but media coverage is increasingly questioning why the Bank has not yet acted on interest rates.

de Jong has the following to say:

"Dennis de Jong, managing director at UFXMarkets, comments on UK interest rates
 
“Although it remains unlikely that there will be a rate hike in the next few months, if the economy continues to grow at its current pace the Bank of England may be forced to press the button before the end of the year.
 
"Growth in the services sector has followed on from positive readings in both manufacturing and construction. The potential housing bubble is the main concern for Mark Carney now and a rate rise sooner than expected could be the way to stave off that threat."

Meanwhile, Barclays reckon the first interest rate hike from the Bank of England remains in the distant future:

"Because of a combination of muted inflation pressures and the uncertainty about the rebalancing of activity, we think that a first hike in 2014 still seems less likely.

"If the recovery is sustained and real average earnings return to growth this year, as we expect, the conditions will be in place for the MPC to start normalising policy next year. We maintain our call for the first hike in Q2 15 and see risks of an earlier increase in Bank Rate if wage pressures in the labour market were to build up faster."

Markets: Wm Morrison, BT and Standard Chartered in focus

Markets have been kind to investors on Thursday with relief over stabilisation in Ukraine playing its part.

There are also some big name stocks in focus:

Wm Morrison

IMS reports that in the 13 weeks to 4 May 2014, total sales ex fuel were 4.2% lower (down 5.6% inc fuel) and lfl sales declined 7.1% (8.2% inc fuel).

It noted that it was making 'good progress' in all its strategic initiatives and added that whilst the trading environment remains challenging, its financial outlook for the full year of underlying PBT in the range of GBP325m-GBP375m is unchanged.

Standard Chartered

IMS notes that performance so far this year is in line with its expectations with the difficult market conditions in Q1 continuing into April and May. Whilst current momentum is ahead of H2 last year, group income as expected in Q1 was down by a low single digit percentage on the corresponding period in 2013.

Performance was impacted by local currency weakness although group income was up slightly on a constant currency basis. Margins have stabilised but remain at compressed levels. It added that overall group operating profit in Q1 was down by a high single digit percentage, in line with expectations and on a constant currency basis was down by a mid single digit percentage.

BT

Q4 and Full Year Results see adjusted PBT for the latter come in 6% higher at GBP2.8bn on revenue of GBP18.2bn. Its BT Sport service is now in around 5m homes and it raised the dividend by 15% to 10.9p. It added that it now expects to increase the latter by 10%-15% for each of the next 2 years.