The Pound to Euro (GBP/EUR) exchange rate advanced on Monday despite a lack of market moving data from either the Eurozone or UK.
Although the UK’s Lloyds Employment Confidence index showed improvement today the report wasn’t the kind to trigger much Pound movement and the GBP/EUR pairing barely fluctuated.
Given the fact that the upcoming Scottish referendum has been putting pressure on the Pound lately, the British asset did derive some support from comments issued by Scotland’s First Minister, Alex Salmound.
Representatives from the UK have thrown up arguments against the concept of a currency union existing between the UK and an independent Scotland, but Salmond has stepped up to dismiss these worries.
Salmond asserted; ‘There is literally nothing anyone can do to stop an independent Scotland using Sterling, which is an internationally tradable currency. We are keeping it, come what may. [According to the Fiscal Commission Working Group] retaining Sterling in a formal currency union is the best option for Scotland. It is also the best option economically for the rest of the UK. As such, the No campaign’s tactic of saying no to a currency union makes absolutely no economic sense.’
Salmond added; ‘Assets and liabilities go hand in hand, and no one would expect Scotland to pick up a share of the debt if we were being denied a share of the assets.’
The Pound to Euro exchange rate reached a high of 1.2545 on Monday before settling to trade in the region of 1.2540.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
While the Pound could fluctuate in response to the British Retail Consortium’s Like-for-Like sales report (which economists hope will show a 0.9% year-on-year increase in July), the direction taken by the GBP/EUR pairing is more likely to be dictated by the Eurozone’s ZEW economic sentiment surveys for August.
If the measures for the Eurozone and its largest economy show the decline in confidence anticipated by industry experts the Pound could rally against its European currency counterpart.
The Pound Sterling to Euro (GBP/EUR) exchange rate could even push back towards 1.26 as the week progresses if the UK’s employment report shows another decline in the nation’s unemployment rate.
A surprising rebound in UK Average Weekly Earnings would be a major market mover, as would any hints from the Bank of England (BoE) regarding the time line for raising interest rates. Consequently, the BoE Inflation Report (out on Wednesday) will also play a key part in GBP/EUR exchange rate movement this week.
UPDATED: 09:15 GMT 12 August, 2014
Pound to Euro Exchange Rate Unaffected by BRC
The Pound to Euro exchange rate was little changed as the European session progressed on Tuesday.
Although the British Retail Consortium’s Like-for-Like sales figures fell far short of forecasts, the Pound to Euro (GBP/EUR) exchange rate continues to trend above 1.2540.
Economists had expected a 0.9% year-on-year gain in sales but they actually slid by 0.3%.
In the hours ahead the Eurozone’s ZEW Economic Sentiment survey and Germany’s Current Situation report could impact the GBP/EUR pairing.
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