GBP/EUR Conversion Rate Predicted to Dive as Slowing UK Growth Hurts Sterling Demand
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.2% on Wednesday afternoon.
With an absence of British economic data to drive volatility, the Pound softened versus many of its currency rivals. This is due to continued damp sentiment following data yesterday which revealed that British economic growth failed to advance in line with expectations. With the UK manufacturing sector showing no signs of picking up amid issues in Europe and China, many economists predict stunted UK economic growth for some time to come. This will have a detrimental impact on Bank of England (BoE) policy outlook and could delay a benchmark interest rate hike until beyond 2016.
Of the UK’s faltering manufacturing sector, chief UK economist at HSBC Simon Wells said; ‘The manufacturing sector is the biggest cause for concern, where several surveys and official data point to a marked slowing in activity. Indeed, manufacturing is already in its third recession in less than a decade and the level of activity in August 2015 was some 7% below its 2007 peak.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3845.
EUR/GBP Exchange Rate Forecast to Advance ahead of the FOMC Rate Decision
European economic data produced disappointing results today. German Consumer Confidence in October dropped from 9.6 to 9.4, and the German Import Price Index saw unexpected contraction in both the annual and monthly readings in September. Despite this less-than-ideal data out of the currency bloc’s most influential nation, the shared currency advanced. This is likely to be the result of traders awaiting the Federal Reserve interest rate decision. Should the Fed opt to err on the side of caution, with a dovish accompanying press conference, the Euro is likely to surge thanks to EUR/USD negative correlation.
In response to the German consumer confidence data analysts with GFK, who compiled the survey, stated; ‘The good mood seen among consumers in recent months is slowly waning. As last month, economic expectations have fallen sharply, apparently under the influence of the ongoing refugee crisis.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3782 during Wednesday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: FOMC Rate Decision to Provoke Volatility
Given the absence of further domestic data publications to provoke changes, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold losses ahead of the Federal Reserve interest rate decision. The outcome will have a significant impact on the currency market as a whole, but with specific reference to the single currency given that the EUR/USD exchange rate is the most traded on the globe.
Thursday is likely to see significant GBP/EUR movement with British housing data and German labour market data due for publication. However, domestic data may be overshadowed by the outcome of the Fed interest rate decision.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3884 during Wednesday’s European session.
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