Pound Sterling to Euro (GBP/EUR) Exchange Rate Recoups Losses
The Pound went on to claw back most of its initial declines against the Euro despite the Eurozone’s Sentix Investor Confidence index jumping unexpectedly.
The gauge of sentiment surged from 0.9 to 12.4 in February, smashing expectations for a reading of 3.0.
However, ongoing Grexit concerns ensured that the Euro didn’t derive much benefit from the data.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3443
Earlier…
GBP/EUR Exchange Rate Weakened by German Report
While the Pound Sterling to Euro (GBP/EUR) exchange rate remained trading above 1.34 on Monday, the pairing did post a 0.3% decline in response to the release of surprisingly upbeat German trade figures.
The Euro was moderately bolstered as German exports increased by 3.4% on the month in December (rather than the 1.0% forecast) and imports dipped by -0.8% instead of increasing by 0.2%.
Germany posted a current account surplus of 25.3 billion in December.
The expectation that today’s Sentix Investor Confidence index for the Eurozone will show improvement lent the Euro additional support.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading in the region of 1.3429.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate could extend gains and touch fresh highs next week if the Bank of England’s (BoE) inflation report strikes an optimistic tone.
GBP/EUR Exchange Rate Trends above 1.34 on UK Data
A sturdy run of UK Purchasing Managers’ Indexes saw the Pound advance on the Euro and enjoy its most sizable 5-day gain against the US Dollar for a year this week.
While demand for the Euro was undermined by an uncertain political situation in Greece, the Pound registered gains against the majority of its currency counterparts as Manufacturing, Construction and Services PMI’s all pointed to faster-than-forecast expansion in January.
All three gauges surpassed expectations and moved further above the 50 mark separating growth from contraction.
Separate data, revealing a spike in house price growth, also lent the Pound support over the course of the week and the British currency climbed by 0.9% against the Euro by the close of European trading on Friday.
According to currency strategist Lee Hardman; ‘Some of the pessimism toward the UK economy at the end of last year seemed to have eased as recent data suggested the recovery here is solid. The Pound should remain supported. Especially against the Euro.’
With the Greek debt situation remaining far from clear cut, and negotiations on the subject expected to get more heated in the weeks ahead, investors viewed Sterling as a safer-bet than its common currency counterpart and the GBP/EUR pairing climbed from 1.32 at the beginning of the week to 1.34.
Sterling’s gains against the US Dollar were stymied by Friday’s unexpectedly upbeat US Non-Farm Payrolls report, but the Pound Sterling to US Dollar (GBP/USD) exchange rate still advanced by 1.2%.
If UK data continues to show improvement, the Bank of England (BoE) might be persuaded to raise the benchmark interest rate from its current record low of 0.5% sooner than currently projected.
However, while UK employment, services and wage growth data will all be of major importance over the next couple of months, if the nation’s inflationary outlook fails to pick up, a rate hike taking place before 2016 looks unlikely.
Consequently, the BoE’s inflation report (due for publication this week) will be closely attended to.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
The pace of UK consumer price gains recently fell below 1%, and some industry experts have suggested that inflation could be in negative territory before the end of the year.
However, the core measure of UK inflation (which strips out volatile factors like fuel and energy) remained fairly solid, indicating that if the price of oil should climb, inflation may follow suit.
The BoE’s quarterly inflation report is scheduled for publication on the 12th, and if the central bank is cautiously optimistic on the subject (or at least not overtly dovish) the Pound could rally and potentially touch fresh highs against peers like the Euro.
UK data, including the nation’s NIESR GDP estimate for the three months through January, will also be influential over the next five days.
On Sunday the Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3462
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5246
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7421
