The Euro to Pound (EUR/GBP) exchange rate has recorded gains ahead of a potentially influential day for Sterling, while the Euro to US Dollar (EUR/USD) currency pair remains in a narrow range.
Final third quarter German Gross Domestic Product (GDP) figures fell in line with initial forecasts which offered investor sentiment in the Single Currency some stability. However, Bundesbank’s Financial Stability Report is out later in Tuesday’s session which could see the Euro fluctuate.
In Monday’s session… The The Euro to US Dollar (EUR/USD) and Euro to Pound (EUR/GBP) exchange rates have both advanced ahead of the European Central Bank (ECB) announcing its covered bond purchases.
The US Dollar could sink lower if the Dallas Federal Reserve Manufacturing index falls in November from 10.5 to 9.0 as economists’ have forecast. The Chicago Federal Reserve National Activity index fell in October which showed economic growth moderating. The index fell from 0.29 to 0.14, surprising economists’ after they’d forecast the figure to climb to 0.40.
Earlier in the session… The Euro to Pound (EUR/GBP) exchange rate has been trending lower, while the Euro to US Dollar (EUR/USD) currency pair advanced. The Single Currency was offered some support from favourable German IFO figures early in the European session which allowed it to reclaim some lost ground against other currency majors.
German Ecostats Boost Euro (EUR) Exchange Rate
German IFO ecostats were all expected to decline on Monday as the flailing Eurozone recovery continues. However, in a surprise twist, the German Business Climate jumped from 103.2 to 104.7 in November, while the Current Assessment also rose from 108.4 to 110.0. The icing on the cake was favourable IFO Expectations numbers which also rose to 99.7 from 98.3.
Today’s increase was the first improvement since April, at a time where the Euro is hovering precariously near a two-year low at $1.241 against the US Dollar (EUR/USD).
Currency expert Edward Knox commented: ‘This morning’s surprise revelation that German business confidence improved in November has provided the beleaguered Eurozone with an isolated spot of good news.’
Political Uncertainty causes Pound (GBP) Exchange Rate Fluctuations
The Pound depreciated quite significantly last week when UK politics took an interesting turn. Rising political party UKIP gained its second seat in parliament which contributes to speculation that 2015’s general election could take everyone by surprise.
The Pound has clawed back some of last week’s losses early in the European session after the latest YouGov poll revealed the latest voting intention in the UK. Conservatives and Labour both held 33% of the votes, while UKIP recorded 16% and Liberal Democrats only held 7%.
Meanwhile, the US Dollar is trading in anticipation of US Markit Composite and Services Purchasing Managers Indexes (PMI) this afternoon which could help the US Dollar to rally. Investor sentiment in the US Dollar increased as speculation mounts that the Federal Reserve could be the first to hike interest rates out of the Group of Seven (G7) developed nations.
Euro to Pound (EUR/GBP) and Euro to US Dollar (EUR/USD) Exchange Rate Forecast
Tuesday may see the Euro move quite significantly when final German Gross Domestic Product (GDP) figures are released. If GDP growth defies economists’ forecasts (either positively or negatively) the Euro could fluctuate.
The UK will publish BBA Loans for House Purchase figures which will be shortly followed by Bank of England (BoE) Governor Mark Carney speaking in London. The US Dollar may be damaged if Gross Domestic Product figures fall in line with economists’ predictions. However, the US Consumer Confidence is expected to grow and could offer US Dollar gains.
The Euro to Pound (EUR/GBP) exchange rate is presently trending in the region of 0.7905, while the Euro to US Dollar currency pair (EUR/USD) reaches 1.2406.
