GBP/EUR Conversion Rate Predicted to Edge Lower after British Construction Slowed
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.5% on Wednesday afternoon.
In response to less-than-ideal British economic data the Pound softened across the board. The UK Construction PMI came in at 55.3 in November which was well below the median market forecast drop from 58.8 to 58.5. This weak construction output, coupled with yesterday’s slower-than-forecast manufacturing output in November, has caused many traders to project long-term delays to a Bank of England (BoE) benchmark rate hike. Should tomorrow’s services print fail to impress, previous expectations that fourth-quarter sectoral growth would outstrip the third-quarter will be a distant memory.
Commenting on the UK construction report, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: ‘Suppliers continued to struggle this month, citing shortages in key materials, supply chain capacity and skilled capability as the causes. But there is a question mark over the coming months as the housing sector, normally the star performer, may drag back on recovery along with the lack of availability of skilled staff. Many firms were forced to use more expensive contractors and, further combined with the hoped-for continued job growth failing to materialise, this may leave commentators wondering what’s next.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4122.
EUR/GBP Conversion Rate Predicted to Hold Gains ahead of ECB Decision
Wednesday’s European session saw the single currency hold a weak position versus most of its currency rivals. This was due to disappointing inflation data which saw Eurozone consumer prices miss estimates. November’s annual Eurozone Consumer Price Index was predicted to rise from 0.1% to 0.2% on the year, but the actual result held at 0.1%. In addition, November’s Core Eurozone Consumer Price Index failed to meet with the median market forecast 1.1% on the year, with the actual result dropping to 0.9%. These low inflation readings support predictions that the European Central Bank (ECB) will look to ease monetary policy during tomorrow’s policy meeting.
Although there will be a number of European ecostats published ahead of the ECB decision, the single currency is likely to see subdued trade ahead of the outcome. Many analysts predict that the ECB decision will provoke significant market volatility so it will likely dominate trader focus.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.4108 during Wednesday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Trend Statically ahead of ECB Interest Rate Decision
Given the increased odds of the ECB stimulating monetary policy tomorrow, the currency market is likely to see subdued trade ahead of the outcome. Therefore, the Pound Sterling to Euro (GBP/EUR) exchange rate could trend statically in the early stages of Thursday’s European session. With that being said, however, British services data has the potential to stimulate Sterling movement. Although policy easing from the ECB has been somewhat priced-in, expect the single currency to extend losses if the Frankfurt-based central bank does indeed expand accommodative monetary policy.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4225 during Wednesday’s European session.
