Pound Sterling to Euro (GBP/EUR) Exchange Rate Climbs ahead of UK CPI Figures
Confidence in Pound Sterling (GBP) remains stronger on Tuesday morning ahead of the latest UK Consumer Price Index report, with pundits anticipating a modest uptick in inflationary pressure. Consequently the Pound Sterling to Euro (GBP/EUR) exchange rate was trending higher at 1.2981.
Earlier…
After a weaker round of Eurozone GDP figures ahead of the weekend the Euro (EUR) remains on a softer footing against the Pound (GBP) today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Trended Higher on Disappointing Eurozone GDP Data
Although December’s UK Construction Output figures failed to improve by as much as forecast, clocking in at growth of 0.5% on the year rather than 0.8%, the Pound Sterling to Euro (GBP/EUR) exchange rate nevertheless returned to stronger form on Friday. Largely this rally was driven by a disappointing raft of Eurozone GDP results, which encouraged speculation that the European Central Bank (ECB) will be prompted to loosen monetary policy further in March. Growth across the currency union was generally weaker, as negative global headwinds formed an increasing drag on the domestic economies. With safe-haven demand also more limited due to a stock market rally the Euro (EUR) was softened across the board.
Stock Market Rally and Dovish Draghi Weigh on Euro (EUR) Exchange Rate Today
The latest UK Rightmove House Prices report showed that the domestic housing market had continued to heat up in February, failing to assuage concerns that a bubble is forming within the market. However, this indication of relative strength within the UK economy has prevented the Pound (GBP) from taking a more dovish turn against the single currency this morning as investors look for reassurance.
As the reopening of the Shanghai Composite Index was not enough to reverse the current uptrend in global stocks an increasing atmosphere of risk appetite has dented the appeal of the common currency further. While December’s Eurozone trade surplus widened, the figure did not sufficiently impress traders, clocking in at 24.3 billion rather than 27.5 billion Euros. Speaking to the European Parliament this afternoon, ECB President Mario Draghi reiterated that the central bank is prepared to act further in order to safeguard the single currency. This message has kept the Euro trending lower despite previous trader scepticism stemming from the ECB’s failure to deliver significant easing in December.
GBP/EUR Exchange Rate Forecast: Uptick in UK Inflation Predicted to Bolster Pound
Further gains could be in store for the Pound tomorrow with the release of the UK’s January Consumer Price Index as pundits are expecting to see a modest uptick in domestic inflationary pressure from 0.2% to 0.3% on the year. While even an improvement here would leave the UK’s level of inflation well below the Bank of England’s (BoE) 2% target, a stronger showing would nevertheless increase the appeal of Sterling, suggesting greater robustness within the local economy.
Should Tuesday’s ZEW Economic Sentiment Surveys show a substantial decline in confidence in Germany and the wider Eurozone, the single currency is likely to continue ceding ground to its rivals, offering little incentive to buy back into the weakened safe-haven.
Current GBP, EUR Exchange Rates
At the time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending higher at 1.2945, while the Euro to Pound Sterling (EUR/GBP) pairing was slumped around 0.7724.
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