The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.39% on Tuesday morning.
With the general election fast approaching, political uncertainties have seen traders reluctant to invest heavily in the British Pound. A complete absence of domestic data to curb the trend ought to see the Pound continue to decline over the course of Tuesday’s trade.
After European Central Bank (ECB) President Mario Draghi showed confidence in the quantitative easing scheme the shared currency strengthened versus many of its major peers. Draghi’s reassurances that the Eurozone is showing signs of steady recovery has seen improved sentiment towards the ECB.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3963.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.38% on Monday afternoon.
With political uncertainty clouding the outlook for the Pound, trader reluctance to invest has seen the Pound holding steady versus the majority of its most traded currency rivals. The Pound has managed to avoid significant declination despite poor domestic data, however, amid speculation that quantitative easing in the Eurozone will be beneficial for the UK.
The shared currency, similarly, is holding relatively steady versus most of its major peers. With the European Central Bank (ECB) announcing quantitative easing purchases later on Monday afternoon, traders are being cautious in case there has been a hiccup with sourcing the requisite bonds to fund the massive injection of liquidity.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3985.
Pound Sterling (GBP) Exchange Rate Trading Statically despite Cooling House Prices
Given that the forthcoming British general election is widely viewed as the most hotly contested in recent history, the minefield of political uncertainty is likely to weigh heavily on investor confidence with regards to Sterling demand.
Although it had little impact in terms of promoting declination, Monday’s disappointing domestic data is yet another stumbling block preventing appreciation. Yearly Rightmove House Prices showed growth of 5.4% in March; slightly below the previous growth of 6.6%. On the month, March’s House Prices increased by 1.0%; down from February’s 2.1% advance.
‘There is still high demand for the right property at the right price with agents reporting that quality stock is selling well despite some election jitters said Miles Shipside, Rightmove director. ‘Rightmove recording nearly 59 million page views in one day suggests that home-movers have a confident outlook, while remaining choosy about what they will buy. Stunningly attractive long fixed-term mortgage rates are obviously another great boost to positive sentiment.’
The Pound Sterling to Euro (GBP/EUR) exchange rate has fallen to a low of 1.4004 today.
Euro (EUR) Exchange Rate Holds Steady ahead of Key Speeches
ECB President Mario Draghi will be speaking in Frankfurt later on Monday. It could potentially be a significant speech with the announcement of quantitative easing purchases coming four-hours prior. The QE purchases announcement will be important because most experts are still unsure as to how extensive a program the ECB can fund amid uncertainties regarding the purchase of requisite bonds to fund the operation.
‘There has been a lot of scepticism about the ability of the ECB to buy in the market … so probably they wanted to show that they have enough sellers out there. Maybe now they say ‘we have made our point and we would go more softly in the next few weeks’ or they will continue to show their power,’ said Piet Lammens, a strategist at KBC.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Fluctuate
Given the importance placed on the ECB QE announcement, and with a speech from Draghi to follow, there is a high likelihood that the Pound Sterling to Euro (GBP/EUR) exchange rate will fluctuate later on Monday.
Tuesday is likely to see heightened GBP/EUR volatility with the German ZEW Economic Sentiment Survey due for publication. However, should the ECB announcement surprise economists in some way, European data may not be particularly impactful.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.4071 today.
