Pound Sterling to Euro (GBP/EUR) Exchange Rate Could Advance Next Week if Eurozone Data Falls Short
Next week volatility in the Pound Sterling to Euro (GBP/EUR) exchange rate is most likely to occur in response to a stream of highly influential economic reports for the Eurozone.
The currency bloc’s largest economy, Germany, is scheduled to release growth, employment and inflation figures over the course of the week.
Any negative results from the nation would put the Euro under pressure and could see the Pound gain on its European rival.
Concerning inflation data, in particular, may see the GBP/EUR exchange rate break out from its current trading range around the 1.25 level.
Earlier…
GBP/EUR Exchange Rate Benefits From Sales Report
The Pound Sterling to Euro (GBP/EUR) exchange rate continued trending in a stronger position on Thursday as the climb in UK retail sales gave the British currency a boost.
The 0.8% increase in retail sales surpassed expectations and kept the Pound trading in a stronger position against the majority of its currency counterparts.
Weakness in the manufacturing and services sectors of the Eurozone’s largest economies also played a part in the GBP/EUR gains.
Tomorrow’s UK public Sector Net Borrowing data could cause a final flurry of Pound movement before the weekend. Investors will also be taking an interest in a speech to be given by the Bank of England’s David Miles at an Economics Conference in Bristol.
Other economic reports to be aware of include Canada’s CPI.
Earlier…
GBP/EUR Exchange Rate Declines before Retail Sales
The Pound Sterling to Euro (GBP/EUR) exchange rate drifted slightly lower on Thursday ahead of the release of the UK’s retail sales figures.
Sterling trending around the 1.25 level, briefly falling to a low of 1.2454.
If the sales data shows the gain anticipated, the GBP/EUR exchange rate could advance.
Earlier…
GBP/EUR Exchange Rate Holds Gain
The Pound Sterling to Euro (GBP/EUR) exchange rate held the day’s advance prior to the publication of the UK’s retail sales figures.
The report, scheduled for release on Thursday at 09:30 GMT, is expected to show that retail sales increased by 0.3% on the month in October following September’s 0.3% decline.
Retail Sales are believed to be up 4.2% on the year.
If the reports show the increases forecast, the GBP/EUR exchange rate could push higher before the weekend.
Economists will also be focusing on the Markit Manufacturing/Services/Composite PMI’s for the Eurozone and its largest economies.
Divided MPC Supports Pound Sterling to Euro (GBP/EUR) Exchange Rate
As the Bank of England (BoE) meeting minutes showed that the Monetary Policy committee was divided on the subject of increasing interest rates, the Pound Sterling to Euro (GBP/EUR) exchange rate advanced by 0.2% following their release.
The Pound also gained on the US Dollar (GBP/USD) and extended its previous rally against the Australian Dollar (GBP/AUD).
The minutes stated: ‘Among the members in this group, there was a material spread of views on the balance of risks to the outlook. There was a risk that growth might soften further than anticipated and that inflation might persist below the target for longer than expected. In that case a premature tightening in policy would leave the economy vulnerable to shocks, with the scope for any stimulus that subsequently became necessary being limited by the effective lower bound on interest rates. Against this, however, there was also a risk that the degree of spare capacity would be eliminated more quickly than assumed in the November Report’s central projections, were Bank Rate to follow the path implied by market yields. That would potentially result in inflation rising to, and subsequently overshooting, the 2% target. Individual members ascribed materially different probabilities to these risks.’
A disappointing Construction Output report from the Eurozone also helped the Pound Sterling to Euro (GBP/EUR) exchange rate uptrend.
The -1.8% month-on-month decline in output in October wiped out September’s 0.7% gain and was another sign of weakness in the currency bloc.
The report saw industry expert James Boston note; ‘Despite yesterday’s strong sentiment figures from the Eurozone, there remains little signs of any positive shift in the fundamentals.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Holds CPI Declines
The Pound Sterling to Euro (GBP/EUR) exchange rate remained trending below the 1.25 level on Wednesday.
Although the Pound initially strengthened against peers like the Euro and US Dollar after the pace of UK Consumer Price Inflation unexpectedly accelerated in October, the British currency swiftly pared its modest advance.
Bets that the rise in consumer prices will prove temporary and that inflation will fall below 1% in the near future left the Pound trending lower against the majority of its currency counterparts during the European session.
The Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.2435 and held this loss as trading began on Wednesday.
GBP/EUR Fluctuations Ahead
While today’s Current Account and Construction Output figures for the Eurozone will have an impact on the GBP/EUR exchange rate, investors will be focusing on the publication of minutes from the latest Bank of England (BoE) policy meeting.
Given that UK ecostats have tended to disappoint of late, and the nation’s inflation outlook has deteriorated markedly, the minutes are expected to have a dovish slant.
The latest developments in the Eurozone and wider economy may also have prompted the two previously hawkish members of the Monetary Policy Committee to reconsider their stance on the immediate increase of interest rates.
BoE Minutes in Focus
The BoE minutes are due out at 09:30 GMT and could inspire notable Pound Sterling to Euro (GBP/EUR) exchange rate movement.
The Federal Open Market Committee (FOMC) is also scheduled to release meeting minutes later today.
Their rhetoric is likely to be more hawkish in tone given that US data is impressing and the Fed concluded its quantitative easing programme following the last FOMC gathering.
Pound Sterling (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.5608,
Pound Sterling,,Euro,1.2449,
Pound Sterling,,Australian Dollar,1.8033,
Pound Sterling,,New Zealand Dollar,1.9854,
US Dollar,,Pound Sterling,0.6402,
Euro,,Pound Sterling,0.8029,
Australian Dollar,,Pound Sterling,0.5546,
New Zealand Dollar,,Pound Sterling,0.5038,
[/table]
