The Pound Sterling to Euro (GBP/EUR) exchange rate fell by around 0.2% on Wednesday due to comments issued by the British Chambers of Commerce.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Falls, UK Deficit Narrows
The UK trade deficit may have narrowed slightly in October, but the report did little to support the Pound Sterling to Euro (GBP/EUR) exchange rate.
The GBP/EUR pairing slumped to a low of 1.2636 on Wednesday as the BCC asserted that increasing UK interest rates in the near future could really damage the UK’s economy recovery.
The BCC also cut its UK growth forecasts for 2014 and 2015.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.2661 during the European session as UK data disappointed.
GBP/EUR Exchange Rate Falls as Manufacturing Production Softens
The Pound Sterling to Euro (GBP/EUR) exchange rate drifted lower on Tuesday as Germany’s trade report impressed and the UK’s Industrial/Manufacturing Production figures fell short.
On the year, UK industrial production came in at 1.1%, considerably lower than the annual reading of 1.8% anticipated.
The year-on-year manufacturing production figure of 1.7% was almost half the yearly figure of 3.2% expected for October.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate brushed the 1.27 level on Monday following the release of disappointing German Industrial Production figures.
GBP/EUR Exchange Rate Advances 0.3%
Although the Eurozone published an unexpectedly upbeat Investor Confidence report on Monday, the Pound Sterling to Euro (GBP/EUR) exchange rate was able to climb thanks to below-forecast industrial production stats for Germany, the Eurozone’s largest economy.
Industrial production was shown to have increased by 0.2% on the month on a seasonally adjusted basis in October, half the 0.4% increase anticipated.
Production was up 0.8% on the year, down from the forecast 0.9% but bettering the previous month’s annual figure of 1.1%.
Euro declines were limited as the Eurozone Sentix Investor Confidence gauge surged from -11.9 to -2.5 in December, bettering expectations for a reading of -9.
The Pound’s upward trajectory against its European rival was aided by the UK’s Lloyds Employment Confidence index, which advanced from 0 to 1.
Additional Pound gains occurred as a result of the Bank of England’s (BoE) quarterly bulletin.
In the report the BoE hinted that UK consumers are in a position where they could cope with higher borrowing costs, and that a slow and steady increasing of interest rates wouldn’t have a detrimental impact on the British economy.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate experienced a rocky week of trading, fluctuating between highs of 1.27 and lows of 1.25.
GBP/EUR Exchange Rate Stronger thanks to UK Growth Outlook
Over the course of last week the Pound Sterling to Euro (GBP/EUR) exchange rate recovered from a low of 1.25 to push above the 1.27 level on the back of impressive UK service sector growth.
The unexpectedly strong expansion of the UK’s primary sector was a positive development given that the pace of domestic growth has slowed in recent months.
The report was also in direct contrast with services reports published by the Eurozone’s leading economies, which showed ongoing weakness in the currency bloc’s core.
However, the GBP/EUR currency pair later lost some of the ground accrued thanks to the UK ecostat as the European Central Bank (ECB) held off from introducing additional stimulus at its latest policy meeting.
ECB Delays Stimulus, Euro (EUR) Exchange Rate Climbs
As some industry experts had anticipated the ECB taking action, the Euro rallied across the board in the wake of the decision.
According to Angela Monoghan and Graeme Wearden of The Guardian; ‘Some investors were left disappointed that he did not announce a programme of full-blown quantitative easing (QE), where the central bank would buy government bonds to stave off a deflationary spiral. However, Draghi suggested he would not allow opposition from Germany, which has been a staunch opponent of QE in the Eurozone, to stop a programme if it was considered necessary.’
Similarly, economist Timo del Carpio stated; ‘In its final meeting of the year, the governing council failed to bestow any new holiday gifts for the euro area economy. [They] did, however, manage to keep the prospect of further support in the New Year very much alive.’
That being said, signs of dissension among ECB policymakers did weigh on the Euro before the end of the week.
However, before the close of the week the contrast between the UK and Eurozone’s economic performances helped the Pound trend higher, and the Euro also tumbled against the US Dollar as a result of the strong US Non-Farm Payrolls print.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Fluctuate this Week
Next week there are a number of reports which could have an impact on the performance of the Pound Sterling to Euro (GBP/EUR) exchange rate.
One ecostat particularly worth noting is the National Institute of Economic and Social Research’s UK growth estimate for November. Given that the UK previously posted growth of 0.7% (while the Eurozone’s GDP languished at a quarterly rate of 0.2% in the third quarter) a figure of 0.7% or higher would be Pound positive.
The pace of UK growth appears to be slowing however, so this data could disappoint.
After the publication of the UK’s third quarter growth data (compiled by the Office for National Statistics) industry experts asserted; ‘Britain’s economic recovery remains on track, with 0.7% growth in the third quarter according to the ONS’ second estimate. However, the detailed breakdown of the data appeared less rosy. Growth was dependent on household spending and the services sector at a time when the national ambition is to rebalance towards more exports and business investment – both of which fell between July and September.’
Other UK data to be aware of includes the Confederation of British Industry’s Trends Total Orders/Trends Selling Prices, the British Retail Consortium’s Like-for-Like sales report and the Lloyds Employment Confidence Index.
Of course, the Pound Sterling to Euro (GBP/EUR) exchange rate could also experience volatility as a result of German and UK trade balance stats, final German inflation figures for November and industrial/manufacturing production results for both regions.
