The Pound Sterling to Euro (GBP/EUR) exchange rate is trending within a narrow range on Friday morning.
After British economic data printed positively, the Pound strengthened versus most of its major peers. Consumer Confidence was forecast to rise from -4 to -2, but the actual result advanced to 1.
The Euro, meanwhile, also gained versus the majority of its most traded currency rivals after German data printed positively. German Retail Sales eclipsed the market consensus of a rise from -1.0% to 3.6%, with the actual result reaching 4.0%.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3289.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.56% on Thursday afternoon.
After British data produced mixed results, the Pound fluctuated versus its major peers. With both house prices and reported sales decreasing in January, demand for the British asset dampened.
The Euro, meanwhile, is holding gains against the majority of its most traded currency rivals despite German inflation falling into negative territory for the first time since 2009. This can be attributed to traders anticipating the drop in inflation thanks to low oil prices. In addition, traders anticipate that once the European Central Bank (ECB) introduces liquidity into the market, the low inflation will resolve itself.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3347.
Pound Sterling (GBP) Exchange Rate Fluctuates on Mixed Data
With traders seemingly uncertain about how to take the British data, the Pound fluctuated versus its major competitors on Thursday. Year-on-year Nationwide House Prices softened from 7.2% to 6.8% but avoided declining to the median market forecast of 6.6%. On a monthly basis, however, prices rose from 0.2% to 0.3% in January. In addition, CBI Reported Sales dropped from 61 to 39, but avoided the market consensus of a fall to 32.
Howard Archer, chief UK economist at IHS Global Insight, said house prices were being ‘reined in by an appreciable moderation in housing market activity.’ However, he added: ‘We suspect that the weakening of housing market activity may be close to bottoming out and we see it picking up to a limited extent in 2015 from current levels. Consequently, we expect house prices to rise by a solid but unspectacular 5% in 2015. This compares with the peak double-digit annual house price increases seen earlier in 2014.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low today of 1.3333.
Euro (EUR) Exchange Rate Holds Gains on German Unemployment
Although European data produced mixed results on Thursday, which erred towards the negative, the Euro strengthened versus the majority of its most traded rivals. This can be attributed to traders expecting quantitative easing to aid an inflationary recovery.
German Unemployment Change saw 9,000 fewer unemployed in January, although economists expected 10,000. Unemployment Rate dipped from 6.6% to 6.5%, although the previous figure was negatively revised.
The German Consumer Price Index, however, declined beyond expectations from 0.2% to -0.3%. EU-Harmonised German CPI also softened from 0.1% to -0.5%. However, this data has been taken with a pinch of salt considering low oil prices have caused many developed economies to struggle with inflation.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Losses
Given that the common currency gained irrespectively of disappointing data, and with quantitative easing expected to combat negative inflation, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold losses for the remainder of Thursday.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high today of 1.3434.
