GBP/EUR Exchange Rate Forecast to Strengthen despite Negatively Revised UK GDP
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.6% on Wednesday afternoon.
British economic data produced mostly poor results on Wednesday, but a narrowing of the current account deficit and a 0.5% rise in the Shanghai Composite Index supported demand for the British asset. Although the final figure for second-quarter Gross Domestic Product was negatively revised, growth of 2.4% is still comparatively robust. A larger-than-anticipated drop in British Consumer Confidence has slowed Sterling gains, however.
‘We remain upbeat about the prospects for the UK’s economic recovery,’ said Paul Hollingsworth, an economist at Capital Economics in London. ‘Business and consumer confidence remains strong, credit is cheap and becoming more available, and households are yet to spend all of their windfall from lower energy and food prices.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3540.
EUR/GBP Conversion Rate Predicted to Dive after Poor European Economic Data Results
European economic data printed poorly on Wednesday which weighed heavily on demand for the common currency. German Retail Sales contracted in August, German Unemployment Change unexpectedly rose and European Unemployment failed to decline. However, the most disappointing data result was Eurozone Consumer prices which dropped to -0.1%. With inflation in negative territory, many economists fear that the European Central Bank (ECB) will loosen policy in order to accelerate price pressures.
‘Draghi stressed repeatedly that if economic and inflation prospects deteriorated yet again, the central bank would take further measures,’ said Michael Schubert, an economist at Commerzbank AG in Frankfurt. ‘This is likely to occur in our view, as both growth and core inflation should be about half a percentage point lower in 2016 than the ECB currently expects.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3448 during Wednesday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains as ECB Debates Stimulus
Given the absence of further domestic data publications to provoke volatility, and with the ECB debating expanding stimulus measures, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains for the remainder of Wednesday’s European session. Thursday is likely to see heightened GBP/EUR movement with UK, German, Italian, French and Eurozone Manufacturing PMIs due for release.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3584 during Wednesday’s European session.
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