The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a tight range on Friday morning.
With the Eurogroup meeting in Riga currently in progress, the shared currency ticked higher versus many of its most traded currency rivals. The appreciation is likely to be the result of expectations that the issues of contention between Greece and Eurozone officials will be closer to resolution. Aiding the Euro uptrend was positive data out of the currency bloc’s most influential economy, Germany.
The Pound, meanwhile, strengthened versus the majority of its most traded currency rivals. This is probably the result of traders fearing that Thursday’s declination was overdone. Also aiding sentiment towards the Pound is speculation that the Bank of England (BoE) will be looking to increase the lending rate after the general election concludes.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7188.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.66% on Thursday afternoon.
Although European economic data produced disappointing results on Thursday, the common currency strengthened versus the majority of its most traded currency rivals. The appreciation is likely to be a correction from overdone declination as Greek woes have been well and truly priced-in.
The Pound, meanwhile, softened versus the majority of its most traded currency competitors after domestic data showed retail sales dipped rather climbing as expected. Aiding the Pound’s declination is damp trader confidence as the general election causes political uncertainty.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7179.
Euro (EUR) Exchange Rate Strengthens despite Less-than-Ideal Domestic Data
European economic data printed particularly poorly on Thursday, although this had little impact with traders correcting previous depreciation. Eurozone Manufacturing, Services and Composite PMIs all failed to meet with forecast figures and all declined from previous figures. Also, the German Purchasing Managers Indexes didn’t meet with expectations.
Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said; ‘There are signs of increased risk aversion creeping in among businesses and their customers, linked in some cases to worries about Greece, which is likely to have dampened demand. However, in the case of France, the poor performance appears to reflect a longer-term malaise which, after a promising start to the year, in fact shows few signs of lifting.’
Also aiding the single currency appreciation was German Consumer Confidence which improved from 10.0 to 10.1, the highest level since 2001.
The Euro to Pound Sterling (EUR/GBP) exchange rate has fallen to a low of 0.7113 today.
Pound Sterling (GBP) Exchange Rate Softens on Political Uncertainty
With the British general election just two weeks away, the Pound is struggling to sustain any concrete gains. This is not surprising given that the many varied opinion polls are unanimous only in that there is no clear majority for any party. This has dampened investor confidence significantly as fears of a major policy overhaul fuel political uncertainties.
British retail sales data produced disappointing results on Thursday, which oiled the Sterling slide. On the month, March’s Retail Sales declined by -0.55 despite the median market forecast sales growth of 0.5%.
Keith Richardson, managing director for retail at Lloyds Bank Commercial Banking, said: ‘Even with continued falls in fuel and food prices, consumers are responding to this current period of uncertainty by being just as careful about their own spending as they have been for the past few years.’
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Gains
Given the absence of domestic data pertaining to both the UK and Europe, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold gains for the remainder of Thursday’s European session.
Friday could see heightened EUR/GBP volatility with Eurozone officials meeting in Riga to discuss Greece’s financial woes. German economic data may also be of interest to those invested in the single currency. A complete absence of British data should see the Pound continue to trend lower with political uncertainty adding downward pressure.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7186 today.
