GBP/EUR Exchange Rate Forecast to Fluctuate
At the close of last week the Pound Sterling to Euro (GBP/EUR) extended declines following the publication of some better-than-forecast growth figures for the Eurozone and its largest economies.
However, while growth exceeded expectations in the third quarter, the situation in the currency bloc is far from rosy.
As observed by economist Peter Vanden Houte: ‘Before getting overexcited by the slightly better than expected growth figure, one should bear in mind that the current growth pace is only about half the potential growth rate and that the Eurozone’s GDP is still more than 2% below its level at the start of 2008. Not exactly an economic boom.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is forecast to see some movement next week.
Monday’s British data is relatively inconsequential in terms of provoking wider market movement. The Rightmove House Prices data will spark movement for the Pound, but is unlikely to cause pronounced changes.
Similarly, Monday’s European data will have minimal impact on the currency market, but will influence the single currency. Eurozone Trade Balance hit 9.2 billion previously.
GBP/EUR Exchange Rate to Strengthen on Monday?
With a large number of influential domestic data publications, there is increased potential for the Pound Sterling exchange rate to experience volatility on Tuesday. Those invested in Sterling will be looking towards the Consumer Price Index and Producer Price Index to dictate Pound movement.
The single currency will also be subject to movement on Tuesday thanks to influential German data. The German Survey for Economic Sentiment holds the most potential to provoke Euro fluctuations. Those invested in the common currency will also be looking towards the German Survey for Current Situation and the Eurozone Survey for Economic Sentiment to gauge Euro changes.
UPDATE
The Pound to Euro exchange rate is currently trending in the region of 1.2506.
As traders await Eurozone Trade Balance data, the Pound to Euro exchange rate is trending within a narrow range. British data has produced mixed results on Monday which has seen the Pound relatively unmoved against its major peers. Rightmove House Prices dropped from 2.6% to -1.7% on a monthly basis, but appreciated from 7.6% to 8.5% on a yearly basis.
But GBP/EUR Exchange Rate Gains could Decline on Tuesday
Although European data is of little significance on Wednesday, the Pound is likely to decline against the Euro as a result of the publication of minutes from the Bank of England’s most recent policy meeting. Any sign that the two hawkish policymakers have reversed their stance will see the Pound plummet across the board.
When speaking of the BoE minutes Boby Micheal stated: ‘Two of the nine Monetary Policy Committee (MPC) members of the Bank of England voting in favour of a hike in the benchmark bank rate from its record low of 0.5% at the August meeting was an indication that the UK will start hiking rates sooner than the Fed. That helped the pound fight the Scottish referendum-related negatives then weighing on the currency. Ian McCafferty and Martin Weale have done the same at all the meetings since then, though the rest continued to vote successfully to keep the rates unchanged. However, a change this month in favour of the majority’s stance is not ruled out, thanks to lack of continued data support from the UK. Moreover, many economic signals have revealed downside risks to growth and inflation.’
UPDATE
The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2531.
As traders await the UK inflation data, the Pound slumped against the Euro on Tuesday morning. A very slight uptick in EU 25 New Car Registrations, rising from 6.4% to 6.5%, has aided a common currency appreciation against many of its major peers.
The British Consumer Price Index is forecast to equal the previous figure of 1.2%. The data is particularly significant because the Bank of England have targeted rising inflation as one of the prerequisites for monetary policy normalisation.
Pound to Euro Exchange Rate to Fluctuate
A plethora of domestic data publications will see both the Pound and Euro subject to volatility on Thursday. British data to look out for is Retail Sales and Retail Sales Inc Auto.
In terms of European data to look out for; the German Manufacturing PMI, German Services PMI, German Composite PMI, Eurozone Manufacturing PMI, Eurozone Services PMI and the Eurozone Composite PMI will have the most influence over the Euro.
Given that there is a complete absence of domestic data on Friday to influence single currency movement, the Euro is likely to be subject to fluctuations in the currency market.
Those invested in the Pound will want to pay attention to Public Sector Net Borrowing to influence Sterling changes.
