Over the next five days considerable Euro/Pound fluctuations are likely to occur in response to a string of influential economic reports.
On Friday better-than-expected growth data for France, Germany and the Eurozone as a whole boosted the Euro against the US Dollar and helped the currency achieve a three-week high.
However, the Euro’s gains against the Pound were limited as a separate report showed a narrowing in the Eurozone’s trade surplus and the British asset was supported by the Bank of England’s optimistic economic forecast.
As a new week began the Pound was able to consolidate and extend gains against its European peer as a Rightmove report showed that house prices increased by 3.3 per cent in February, month-on-month, following an advance of 1 per cent in January.
Euro movement was restrained on Monday due to a lack of economic news for the Eurozone and US markets being closed for a national holiday.
However, as the week progresses we forecast that there will be EUR/GBP exchange rate volatility.
Tomorrow the ZEW economic sentiment surveys for Germany and the Eurozone are likely to impact the Euro. Economists are expecting the German confidence measure to have declined slightly in February, edging from 61.7 to 61.5.
If this proves to be the case, and if the UK’s consumer price index comes in at 2.0 per cent in January year-on-year (in line with the BoE’s target) the Pound could advance further against the Euro.
Similarly, if Wednesday’s UK employment data follows the recent trend and surprises to the upside additional Pound gains are likely.
On Thursday German/Eurozone services and manufacturing PMI figures will largely be responsible for EUR/GBP movement while UK retail sales data will drive the pairing as the week draws to a close.
UK sales increased by 2.8 per cent in January, month-on-month, and another strong advance could help the Pound end the week on a high.
This week’s Eurozone data releases:
Tuesday – German ZEW economic sentiment survey
Eurozone ZEW economic sentiment survey
Germany ZEW current situation survey
Wednesday – Eurozone construction output
Thursday – French, German, Eurozone services/manufacturing PMI
Eurozone consumer confidence
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8189,
Euro,,US Dollar,1.3703,
Euro,,Canadian Dollar,1.5043,
Euro,,Australian Dollar,1.5159 ,
Euro,,New Zealand Dollar,1.6389 ,
US Dollar,,Euro ,0.7297,
Pound Sterling,,Euro,1.2205,
Canadian Dollar,,Euro,0.6649 ,
Australian Dollar,,Euro,0.6593,
New Zealand Dollar,,Euro,0.6102 ,
[/table]
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