Pound Sterling to Euro (GBP/EUR) Conversion Rate Predicted to Trend Lower on Positive European Data
The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.4% on Tuesday afternoon.
Today’s solitary British data produced a disappointing result. November’s Manufacturing PMI was forecast to drop from the 16-month high of 55.2 seen in October to 53.6, but the actual result slowed to just 52.7. However, despite the disappointing manufacturing output, the Pound edged higher versus the majority of its currency rivals. The appreciation, albeit fractional, can be linked to the outcome of Bank of England (BoE) stress tests. All the banks tested by the BoE managed to pass, giving investors some reassurance that the UK could weather another financial storm.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4186.
Meanwhile, the Euro also edged slightly higher versus its major peers following a number of positive domestic data publications. German and Eurozone labour market data bettered estimates, whilst German and Italian Manufacturing Output also eclipsed respective median market forecasts. However, despite the positive data results, the single currency appreciation has been modest. This is due to ongoing speculation that the European Central Bank (ECB) will look to ease monetary policy on Thursday. The single currency also found a little support thanks to a weak US Dollar.
Pound Sterling to US Dollar (GBP/USD) Conversion Rate Predicted to Hold Steady despite Poor US ISM Manufacturing Report
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a limited range on Tuesday afternoon.
In response to the weaker-than-anticipated British Manufacturing PMI, Rob Dobson, Senior Economist at survey compilers Markit, stated; ‘UK manufacturing is moving back into expansion mode during quarter four, as it starts to reverse the losses sustained in the prior quarter. Although the pace of growth so far is only very modest, it positions manufacturing as less of a drag on the broader economy. Robust service sector growth will nevertheless be needed to achieve the 0.6% fourth quarter GDP expansion still required to meet the 2015 growth target outlined in the Chancellor’s Autumn Statement.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5065.
In the early stages of Tuesday’s European session the US Dollar softened versus its peers. The depreciation can be linked to a report out of China which showed manufacturing output in the world’s second-largest economy failed to meet with expectations and remained in contraction territory. This weighed on demand for the US asset amid concern that weakness in emerging markets will cause the Federal Open Market Committee (FOMC) to delay a benchmark rate hike into 2016. Aiding the US Dollar downtrend as the North American session progressed was the ISM Manufacturing report which unexpectedly dropped below the 50 mark which separates growth from contraction.
Pound Sterling (GBP) Forecast to Edge Higher ahead of Construction PMI
Given the complete absence of further domestic data to provoke changes, the Pound is likely to continue trending fractionally higher versus its currency rivals. Wednesday should see renewed Sterling volatility with the UK Construction PMI due for publication. A positive result from construction data would point towards a British sectoral recovery which will likely provoke a more significant Sterling appreciation than has been seen today. On the flip side, however, a disappointing result could lead traders to fear that third-quarter sectoral weakness could be repeated in the fourth-quarter.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.4188 to 1.4271 during Tuesday’s European session.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5049 to 1.5126.
