In a slow data day, the Euro has managed to trend up against Pound Sterling despite being weakened by the US Federal Reserve’s interest rate decision on Wednesday.
EUR/GBP Exchange Rate Forecast: Euro Advances on the Back of Heightened Exports Potential
Wednesday’s Federal Reserve interest rate decision will strengthen the US Dollar, although the Euro failed to weaken to the extent economists had predicted. A stronger ‘Buck’ (USD) is likely to result in a larger demand for European exports, which are currently climbing out of a trough following a slump in July.
With little domestic data released today, most of the movement in the Euro to Pound Sterling exchange rate can be attributed to the news from Brussels regarding the talks on possible reforms suggested by UK Prime Minister David Cameron.
The EUR/GBP exchange rate is currently trending in the region of 0.7272.
GBP/EUR Exchange Rate Slides as David Cameron Hints at 2016 ‘Brexit’ Referendum
Mixed news from the talks in Brussels yesterday and today have seen the Euro to Pound Sterling (EUR/GBP) exchange rate trend with volatility as Prime Minister David Cameron attempts to secure a better deal for Britain from the European Union.
Mr Cameron has been promising a more beneficial relationship with the EU since before he came into power. Pound Sterling softened yesterday after a disappointing performance, with critics believing the PM would follow previous examples and abandon his demands in order to focus on an increasingly smaller set of conditions. Mr Cameron has already halved the number of conditions he wanted to press for since becoming Prime Minister, with four major points still left on his agenda.
One of those appears to have been secured, with the EU agreeing to an ‘emergency brake’ which will allow the UK government to refuse to pay benefits to migrants until they have been resident in Britain for at least four years. However, the emergency system can only be used in certain circumstances, leading critics to suggest that it will have little effect on the Conservative’s aim to curb immigration. This has weakened the positive sentiment that achieving one of the conditions generated.
David Cameron’s hints that Britain’s EU membership referendum, originally tipped to happen in 2017, may now be held next year have further eroded confidence in Pound Sterling today. As a result the GBP/EUR exchange rate has slid -0.2% to trend between 1.3708 and 1.3811.
EUR/GBP Exchange Rate Forecast: Slow Data Week as Christmas Approaches
There will be little data over the course of the next week to push the EUR/GBP exchange rate up or down, with the most important releases being the Eurozone and UK consumer confidence surveys, UK Public Sector Borrowing and the total Loans for House Purchase in November. Markets will likely slow as traders wind down before Christmas and the New Year.
The EUR/GBP exchange rate is currently trending between 0.7238 and 0.7290.
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