On Monday the Pound Sterling to Euro (GBP/EUR) exchange rate edged higher in response to fairly positive news from the UK.
The Rightmove House Price report showed property prices climbing by 2.6% on the month in October, month-on-month, following September’s 0.9% increase.
This took the year-on-year pace of house price gains to 7.6%, down slightly from the previous month’s 7.9%.
According to Rightmove analyst Miles Shipside; ‘Demand has been on the up in most locations so far this year, but agents in many parts of the country report a slowing in that pace with an initial post-summer pick-up failing to gain momentum. The market is still active but with prices having increased in many locations, interest rate rises expected in 2015 and an election on the horizon, buyers are a bit more wary and more value-conscious.’
Sterling was also supported as the accountancy firm Deloitte released a report indicating that consumer confidence in the UK was at a three-year high.
According to Deloitte’s chief economist; ‘Even without growth in real incomes, consumer confidence has continued to rise. Lower oil prices and commodity prices and a strengthening Pound have led to a sharp decline in inflation. An improving jobs market and lower inflation have been a real tonic for UK consumers. With inflation on a declining path and earnings heading up, the scene is set for a recovery in real incomes around the turn of the year.’
The Deloitte Consumer Tracker Index noted a 3% year-on-year rise in consumer sentiment.
Given that recent UK data has been mixed at best, the result was fairly heartening, and another Deloitte official indicated that people are envisaging property values to keep climbing while their indebtedness eases. He added; ‘The decline in the amount spent on essentials like food and utility bills is also expected to continue. However, with the prospect of higher interest rates, along with a cooling housing market, there are still concerns on the horizon.’
The Pound’s upward trajectory against the Euro was also aided by some less-than-spectacular figures from the currency bloc.
German Producer Prices were confirmed to have stagnated in September on the month and registered a -1.0% decline on the year. This was down from an annual drop of -0.8% in August.
The Eurozone’s current account surplus was also shown to have narrowed from a revised 32.8 billion Euros to 15.1 billion Euros in August. A surplus of 15.1 billion Euros had been anticipated.
The Pound Sterling to Euro exchange rate fell to a low of 1.2605 during the European session and achieved a high of 1.2647.
GBP/EUR Could Trend Higher after BoE Minutes
Although tomorrow’s UK public finance figures could have an impact on the Pound to Euro exchange rate, investors with an interest in the pairing will be paying greater attention to Wednesday and the release of the Bank of England’s meeting minutes.
While some industry experts bet that the two hawkish BoE members would retract their votes in favour of rate hikes in light of the recent global economic gloom, Martin Weale used a speech in Hull to assert his continued belief that an immediate increase in borrowing costs would be best for the UK.
If the vote is split, as it has been for the last two months, it would be Pound supportive.
A widening in the divide between those supporting a rate hike and those against it could push the GBP/EUR exchange rate back above technical resistance of 1.27.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7905
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2648
UPDATE
The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2592.
Bank of England Governor Mark Carney is facing scrutiny on Tuesday morning after a nine-hour delay to bank transfers. The BoE had to shut down the system that handles about 575 billion Pounds after routine maintenance produced problems, causing the Parliament’s Treasury Committee to call for a more reliable system.
It is likely, however, that the GBP/EUR exchange rate will strengthen given the lack of European economic data. Those invested in the Pound will be hoping that public finances data produces good results.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7905,
Euro,,US Dollar,1.2759,
Euro,,Canadian Dollar,1.4372,
Euro,,Australian Dollar,1.4561,
Euro,,New Zealand Dollar,1.6047,
US Dollar,,Euro ,0.7825,
Pound Sterling,,Euro,1.2631,
Canadian Dollar,,Euro,0.6955,
Australian Dollar,,Euro,0.6866,
New Zealand Dollar,,Euro,0.6208,
[/table]
