Pound Sterling to Euro (GBP/EUR) Exchange Rate forecast to remain below 1.20 despite negative Eurozone data

The Pound looks likely to spend Wednesday’s session below the psychologically key 1.20 level against the Euro due to a lack of UK data and as events in Ukraine and China impact on market sentiment.

Trade is expected to relatively light until Thursday when important data out of the USA, China and Europe is released. The data will likely give traders direction. Another bout of weak Chinese data is likely to dent the Euro and could send the Pound back above 1.20.

Today the Euro was little moved despite the release of data which showed that industrial production across the Eurozone fell a second consecutive month in January. The data highlights the fragility of the region’s economic recovery.

According to the European Union’s Statistics agency Eurostat, industrial production fell by 0.2% on a month by month basis. The decline took economists by surprise as they had been forecasting production to have risen by 0.5%. Compared to the previous year production was up by 2.1%.

Energy production fell 2.5 percent for a second month in January and output of durable consumer goods declined 0.6 percent, today’s report showed.

Production in Germany and Spain edged upwards but in the Netherlands, the regions fifth largest economy, production tumbled by 6.4% by the month and output fell by 3.5% in Finland and by 0.3% in France.

The Euro was little moved against the US Dollar after the data was released. Tensions in Ukraine and worries over the Chinese economy have seen trade muted as economists wait for data due later in the week.