The Pound Sterling to Euro (GBP/EUR) exchange rate is trending within a tight range on Friday morning.
Positive British data caused the Pound to strengthen versus most of its major peers at the close of the week. However, the gains have been somewhat laboured, with political uncertainties weighing as we draw closer to the general election.
The Euro, meanwhile, is holding gains versus the majority of its peers despite Eurozone inflation data printed disappointingly. This is likely to be as a result of traders speculating that once the European Central Bank (ECB) introduces liquidity into the market the situation in the Eurozone will improve. Additionally, as low inflation is becoming a global issue, and is in part due to the steep drop off in oil prices, Eurozone CPI is unlikely to have the kind of impact it used to on the Euro.
Investors are more likely to fixate on the Eurozone’s modestly positive employment report, which showed a slight improvement in the level of joblessness.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3268.
Pound (GBP) Exchange Rate Edges Higher on Consumer Confidence
As described above, positive British data aided a Sterling uptrend. GfK Consumer Confidence came in at 1 in January, eclipsing the median market forecast of a rise from -4 to -2. The improvement in consumer confidence will be welcomed by the current government, who can use the data as fodder in their election campaign. ‘With less than 100 days before the election, this big jump in the Index will be very welcome news for the government,’ said Nick Moon of GfK.
However, political uncertainties regarding the forthcoming election are weighing on Sterling gains.
In addition to the positive consumer confidence index, UK mortgage data showed 60,300 new approvals in December, bettering estimates of 59,000. The combination of improved consumer sentiment and mortgage approvals micrified disappointing results from Net Consumer Credit and Net Lending Securities on Dwellings data.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3265 today.
Euro (EUR) Exchange Rate Holds Gains despite Soft Eurozone CPI
As is customary of late, the Euro seems to be gaining irrespective of domestic data as traders look to lock in profits following the common currency’s recent lows and speculate that the ECB’s quantitative easing scheme will have a positive impact on the currency bloc.
The Eurozone Consumer Price Index Estimate declined beyond expectations of a drop from -0.2% to -0.5%, with the actual result falling to -0.6%. In addition, the Core Consumer Price Index dropped from 0.7% to 0.5% in January.
A slight decline in Eurozone unemployment, which fell from 11.5% to 11.4%, may be contributing to the Euro uptrend.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Fluctuate
With traders seemingly unsure about how to react to European data, and with the UK general election weighing in the Pound, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to fluctuate on Friday.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high today of 1.3330.
