The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened by around 0.26% on Monday morning.
After German Trade Balance eclipsed expectations, the single currency advanced versus the majority of its most traded currency peers. The advanced has been somewhat laboured, however, whilst traders await Eurozone Investor Confidence data.
The Pound, meanwhile, is generally trending lower versus most of its major peers as a result of Bank of England Governor Mark Carney’s speech ahead of a meeting of G20 finance ministers and central bankers. Carney admitted he was worried about reform fatigue globally, and some speculate he fears that it will have a negative impact on the UK; although he did not intimate those fears himself.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7444.
Previously…
At the close of last week, the Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.67%.
With sentiment towards the common currency stuttering under the weight of a potential Grexit from the Eurozone, the Euro is unlikely to make any significant gains this week until a clearer picture is presented.
The Pound Sterling, conversely, will rely on positive data results to force an uptrend. Better-than-forecast data will also add pressure on the Bank of England (BoE) to hike rates sooner-than-anticipated.
Euro (EUR) Exchange Rate Forecast to Fluctuate on Market Sentiment
As described above, the shared currency is unlikely to be significantly impacted by domestic data as uncertainties regarding Greece loom overhead. That being said, Euro volatility could be provoked by fourth-quarter Eurozone Gross Domestic Product and fourth-quarter German GDP.
Recent media reports have claimed that the German government has upwardly revised its growth outlook for the economy in 2015. They will be hoping that GDP will impress in the fourth quarter in order to solidify the growth revisions. ‘The German economy has return to a growth path despite the geopolitical turbulences in the past year,’ Sigmar Gabriel, minister for economics and energy, said in a statement on Wednesday. ‘The government expects that the [introduction of a national] minimum wage as well as the rise and expansion of state pension payments will boost consumer demand.’
On the off chance that domestic data does impact upon Euro movement; German Trade Balance, Eurozone Investor Confidence, Germany’s Consumer Price Index, Eurozone Industrial Production and French GDP will be of interest to those invested in the Euro.
Pound Sterling (GBP) Exchange Rate Forecast to Advance on Policy Divergence
Although British data is likely to provoke Sterling volatility, the Pound could find continued support thanks to policy divergence. Given that the Bank of England (BoE) avoided easing policy at a time when many other major central banks were forced to stimulate growth, sentiment towards the British institution improved significantly at the end of last week.
There will be several data publication of significance to Pound traders, but none more so than the BoE Inflation Report. Inflation has been the principle driver behind policymakers’ decision to hold rates, so any improvement in language will please rate hawks. However, with oil prices low and with most major economies struggling to recover from negative inflation, the likelihood is that the report will be dovish.
Industrial Production, Manufacturing Production and the NIESR Gross Domestic Product Estimate will also be of interest to those trading with the Pound.
The Pound ‘probably has got more strength ahead’ against currencies including the Euro in nations where central banks have been loosening policy, said Neil Jones, London-based economist.
Unless the 15 billion-Euro limit on short-term borrowing set by Greece’s troika of official creditors is raised, the government may run out of cash on Feb. 25…Greek banks lost at least 15 billion Euros in deposits in the two months before the election, about 9 percent of the total. Beyond that, the ECB is reaching its limit for funding Greek banks,’ stated a Bloomberg report.
At the close of last week, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7431.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3462
