If today’s UK Services PMI impresses and the Eurozone’s retail sales report falls short, the Pound Sterling to Euro (GBP/EUR) exchange rate could surge in the hours ahead.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Could Surge Today
Over the next few hours the Pound Sterling to Euro (GBP/EUR) exchange rate could experience extensive volatility in response to some key data releases.
Although investors are predicting that GBP/EUR trading will remain fairly muted ahead of the European Central Bank’s interest rate decision, a solid services report would give the Pound a boost. Similarly, a below forecast retail sales figure for the Eurozone would see the common currency come under strain.
As it stands, the Pound Sterling to Euro exchange rate is trading in the region of 1.2683, up 0.44% on the day’s opening levels.
Earlier…
After the publication of the UK’s Markit Construction PMI the Pound Sterling to Euro exchange rate was trading in the region of 1.2622, little changed on the day’s opening levels.
GBP/EUR Exchange Rate Trends Higher
The Pound Sterling to Euro (GBP/EUR) exchange rate managed to continue trending in a slightly stronger position on Tuesday, despite the UK’s Construction PMI falling by more-than-anticipated in November.
Markit economist Tim Moore said of the data; ‘ November’s survey highlights that housing, commercial and civil engineering activity all expanded at the slowest rates for over a year. A less favourable overall economic newsflow was cited as the key factor dampening otherwise buoyant demand patterns across the UK construction sector.’
The construction report may have been disappointing, but the fact that the Eurozone’s Producer Price Index declined by more than expected on a month-on-month basis also left the Euro under pressure and minimised GBP/EUR losses.
Earlier…
GBP/EUR Exchange Rate Steady, Construction Could Cause Gains
The Pound Sterling to Euro exchange rate was trending in a narrow range ahead of the publication of the UK’s Construction PMI. The gauge is expected to have softened from 61.4 to 61 in November.
However, if the measure surprises to the upside (as yesterday’s manufacturing report did) the Pound could gain.
Meanwhile, the Euro remains under pressure ahead of the European Central Bank’s interest rate decision.
Last week’s comments from the Bundesbank President left many experts betting that the ECB won’t introduce additional stimulus at the December gathering. As stated by Daniel Gros; ‘The ECB might just be powerless. There are domestic political constraints about which, at the EU level, they can do nothing. The crowd which is yelling for stimulus is basically southern Europe. They say the ECB should do its duty, whatever the governments do.’
As trading progressed on Monday the Pound Sterling to Euro (GBP/EUR) exchange rate continued trending higher while the Pound Sterling to US Dollar (GBP/USD) exchange rate advanced by the most for seven weeks, climbing from an over one-year low.
GBP/EUR Exchange Rate Rallies before BoE, ECB Decisions
After climbing by around 0.3% in response to the UK’s manufacturing gain, the GBP/EUR exchange rate maintained its rally over the course of the day.
The Pound Sterling to US Dollar (GBP/USD) exchange rate also jumped, climbing by over 0.6%.
The movement saw strategist Stuart Bennett comment; ‘The Pound still seems to be something which in fundamental terms could be a buy. You’ve still got an economy that is doing ok’.
Earlier…
With the UK’s manufacturing sector impressing and data for the Eurozone showing room for improvement, the Pound Sterling to Euro (GBP/EUR) exchange rate advanced by more than 0.3% and climbed above the 1.26 level.
GBP/EUR Pushes above 1.26
The Pound Sterling to Euro exchange rate achieved a high of 1.2612 during the European session as investors responded to the UK’s surprising increase in manufacturing growth and the unexpected contraction of Germany’s manufacturing sector.
Although UK Mortgage Approvals were shown to have fallen to their lowest level for over a year, the Pound remained trending in a stronger position against peers like the Euro and US Dollar as the European session continued.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.2580 – up just 0.1% on the day’s opening levels, prior to the publication of final Manufacturing PMI for Germany, France and the Eurozone.
GBP/EUR Exchange Rate Trending Higher
At the start of a fresh week of trading, the Pound Sterling to Euro (GBP/EUR) exchange rate was trading just shy of the 1.26 level.
As the European session continued, demand for the Pound was undermined as Germany’s final manufacturing PMI for November was negatively revised from 50 to 49.5 – taking the gauge below the 50 mark separating growth from contraction.
Markit economist Oliver Kolodseike said of the report; ‘German manufacturers continued to record growth of production in November, but this expansion seems to be based on increasingly shaky foundations. In particular, output expanded despite lower backlogs, falling stocks of finished goods and the sharpest drop in new orders for almost two years.’
With a host of influential data and events scheduled to take place this week, volatility in the pairing can be expected.
UK Markit PMI Gives GBP/EUR Exchange Rate a Boost
Today’s UK Manufacturing PMI and Mortgage Approvals figures are also likely to influence the direction taken by the GBP/EUR pairing in the hours ahead.
The UK’s measure of manufacturing was expected to come in at 53.0 – down slightly from 53.2 in October.
However, the index actually rallied to a four-month high of 53.5, prompting this response from Markit economist Chris Williamson; ‘In the lead-up to the Chancellor’s AutumnStatement, the November PMI survey shows the UK manufacturing sector continuing its solid expansion. Despite easing from the stellar pace set in the first half of the year, growth is still coming from a broad-base that will aid its sustainability. Production and new orders rose across the consumer, intermediate and investment goods industries and at SMEs and large companies alike.The news on the domestic front was especially positive, with solid new order inflows from the UK market the main pillar supporting the expansion.’
The Pound advanced on several of its peers after the report was published.
However, Sterling gains were a little limited as UK mortgage approvals were shown to have fallen to their lowest level for over twelve months in October.
Approvals fell from 61,234 in September to 59,426 in October.
GBP/EUR Could Gain this Week
In the days ahead there are a number or reports to be aware of.
On Tuesday movement in the Pound Sterling to Euro (GBP/EUR) exchange rate could be triggered by UK Construction PMI and the Eurozone’s Producer Price Index.
On Wednesday volatility could be inspired by final Composite and Services PMI for the Eurozone and its largest economies. The UK’s Composite and Services PMI will also be of particular interest, as will the currency bloc’s retail sales report.
Thursday will be all about the European Central Bank’s (ECB) interest rate decision. If the central bank opts to introduce quantitative easing the Euro could plummet across the board. The Bank of England (BOE) is unlikely to make any alterations to fiscal policy, so the BoE meeting will be considerably less influential in terms of GBP/EUR movement.
At the close of the week the BoE inflation expectation report and the Eurozone’s third quarter growth data will dictate what direction the Pound Sterling to Euro (GBP/EUR) exchange rate will take before the weekend.
Pound Sterling (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.5660,
Pound Sterling,,Euro,1.2577,
Pound Sterling,,Australian Dollar,1.8494,
Pound Sterling,,New Zealand Dollar,1.9975,
US Dollar,,Pound Sterling,0.6382,
Euro,,Pound Sterling,0.7950,
Australian Dollar,,Pound Sterling,0.5404,
New Zealand Dollar,,Pound Sterling,0.5004,
[/table]
