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EUR Forecast: Bank of England (BoE) Causes Euro Pound Exchange Rate Gains Friday

Pound Euro exchange rate forecast

  • Euro Pound Exchange Rate Could Extend Advances – Depending on tone of BoE members
  • Wednesday Data Fails to Inspire EUR/GBP Movement – Eurozone industrial production mixed
  • UpdateBank of England (BoE) Hints at More Easing – Sterling sold on Thursday
  • Update: Eurozone Inflation Meets Results – Euro flat as inflation comes in low
  • Forecast: EUR/GBP Weak on Monday – Eurozone PMIs incoming next Friday

Euro Pound Exchange Rate Nears Best Weekly Levels on Friday

The Euro to Pound exchange rate neared its best weekly levels once again on Friday afternoon after slipping on Thursday night as investors continued to sell off the Pound on Thursday’s Bank of England (BoE) news.

The day’s lone relevant ecostat – Eurozone Q2 Labor Costs – came in lower than Q1’s score of 1.6%, at 1.0%. However, this failed to undermine Euro trade at all and the shared currency continued to trend sturdily against the Pound.

Next week, EUR/GBP may continue to advance slightly due to slipping Pound demand as investors await the first economic data collected in September. With bets of further BoE stimulus still high and bets of further European Central Bank (ECB) stimulus dropping, the Pound is unlikely to make a strong recovery without data.

(Previously updated 17:00 BST 15/09/2016)

Euro Pound Exchange Rate Finishes Thursday Higher

The Euro Pound exchange rate trended upwards towards the end of Thursday’s European session and could continue to trend strongly on Friday due to a lack of fresh data on the day’s economic calendar.

Due to a lack of appealing factors in Pound investment this week, it’s highly likely that the Euro Pound exchange rate will end the week above its opening levels – potentially above 0.85.

Next week’s economic calendar is relatively quiet, meaning EUR/GBP could either continue to trend close to its current range on Friday and beyond – or the pair could weaken if investors opt to buy the Pound from its lows.

(Previously updated 14:11 BST 15/09/2016)

Euro Pound Exchange Rate Rallies on Prospect of Further BoE Stimulus

With the Bank of England (BoE) leaving the door open to another interest rate cut at this week’s policy meeting, Sterling declined across the board – giving the Euro Pound exchange rate the chance to rally.

The EUR GBP currency pair advanced to a high of 0.8539 – up 0.6% on the day’s opening levels.

In the opinion of BoE senior economic advisor Andrew Sentance; ‘Businesses and consumers appear to have taken the decision in their stride and are continuing very much as normal, though a period of slower growth is still likely because of the uncertainty surrounding the UK’s future relationship with the rest of the EU.

Last month’s monetary stimulus package, however, dragged down bond yields and added to the funding problems of pension funds. These long-term consequences of a prolonged period of low interest rates require more consideration from the Bank of England and other central banks. As we approach the 8th anniversary of the collapse of Lehmans, interest rates around the western world are still stuck close to zero. That is not a healthy situation for the long-term growth of economies – as we have seen in Japan.’

(Previously updated 11:00 GMT 15/09/2016)

EUR Higher After CPI Data, Euro Pound Exchange Rate Climbs before BoE Decision

The Euro Pound exchange rate remained trading in the region of 0.85 as the European session progressed on Thursday, with the currency pair being supported by the fact the Eurozone’s final inflation figures for August were unchanged from previous estimates.

The rate of inflation in the currency bloc came in at 0.2% on the month and 0.8% on the year, as projected.

Meanwhile, UK retail sales data revealed a -0.3% dip in August, month-on-month, following a better-than-forecast sales increase of 2.1% in July.

On the year consumer spending was up 5.9%, significantly higher than the projected annual reading of 4.8%. However, the data wasn’t positive enough to significantly reduce concerns that the Bank of England (BoE) meeting minutes will hint at the prospect of additional easing being deployed in the not-to-distant future.

Economist James Knightley said of the data; ‘Sterling’s fall is likely to have boosted sales of high-end items by foreign tourists as watches and fashions become relatively cheaper for them when bought in the UK versus elsewhere.’

Pound movement was limited ahead of the Bank of England’s (BoE) interest rate announcement but should the BoE meeting minutes prove surprisingly neutral, the Euro Pound exchange rate could tumble in the hours ahead.

(Previously updated 08:00 GMT)

The Euro Pound exchange rate fluctuated rather flatly throughout Wednesday’s trade session as the day’s mixed ecostats did little to inspire investors to buy into either currency. Ultimately, investors adjusted their levels on the Pound ahead of Thursday’s key Bank of England (BoE) meeting.

EUR/GBP has been able to hold nearer to its weekly highs after Monday’s plummet to 0.8420. On Tuesday, the pair surged to a two-week-high of 0.8532, and while it slipped from these best levels it was able to hold its ground at around 0.8500 throughout Wednesday’s session.

Euro (EUR) Exchange Rates Hold Ground Despite Lack of Strong Ecostats

Euro (EUR) exchange rates have lacked the support of strong ecostats for a few weeks now, but investors continue to buy up the currency due to its appeal when compared with major rivals such as the Pound and US Dollar.

Last week’s European Central Bank (ECB) meeting was also optimistic for the Euro Pound (EUR/GBP) currency pair, as policymakers hesitated to hint at further easing. Some bulls have even speculated that the ECB’s policies could be returning to normalcy, causing a slight increase in Euro demand.

The Eurozone’s domestic data hasn’t been entirely optimistic itself though. German inflation figures met underwhelming preliminary scores when they were published on Tuesday.

Disappointment in German business confidence, according to survey results from ZEW, was also able to offset much of the optimism from an increase in overall Eurozone business confidence increase.

Thursday’s data was also generally uninspiring, as Eurozone industrial production was revealed to have struggled in July. The Financial Times reported;

‘Eurozone industrial production went into reverse gear in July, the month after Britain’s vote to leave the EU, falling by 1.1 per cent compared to June and 0.5 per cent versus a year earlier.

Industrial production in the 19-country bloc has been volatile this year after reaching a post-financial crisis high in January.’

The Euro’s losses were slightly softened by the yearly score of -0.5% beating forecasts of around -0.8%. Although markets were disappointed in the result the Euro Pound exchange rate remained up slightly on the day’s opening levels.

Pound (GBP) Exchange Rate Fails to Recover from Tuesday Plummet

Pound (GBP) exchange rates plunged on Tuesday following the publication of Britain’s August Consumer Price Index (CPI). The figure indicated that inflation had not spiked as some had expected, minimising hopes that the Bank of England (BoE) would change its mind on easing measures.

Wednesday’s fresh UK jobless claims and employment figures were mixed, but some investors were cheered slightly by news that the job market appeared to have been not yet affected by the Brexit vote. According to the BBC;

Economists have said the modest fall in UK unemployment to 1.63 million between May and July shows there is yet to be a “Brexit effect” on the jobs market.

The unemployment rate was 4.9%, down from 5.5% a year ago and little changed from last month’s rate, Office for National Statistics (ONS) data shows. …

Employment was “resilient” before and after the EU vote, despite predictions of an economic shock, analysts said.

However, most investors ultimately avoided buying into the Pound on Wednesday as markets anticipated Thursday’s key Bank of England (BoE) meeting, lending support to the EUR GBP exchange rate in the process.

Euro Pound Exchange Rate Forecast: BoE Meeting, Eurozone Inflation on Thursday

Thursday’s session is certain to be the most vital this week in terms of EUR/GBP movement and forecasts, with key UK and Eurozone data due for publication as well as the Bank of England’s (BoE) September policy meeting.

The Euro (EUR) has an opportunity to find firmer footing if August’s Eurozone Consumer Price Index (CPI) beats expectations and preliminary results. However, amid other underwhelming Eurozone data this may be unlikely.

Indeed, if Eurozone inflation comes in below expectations, the Euro could plummet and cause investors to re-evaluate the chances of further European Central Bank (ECB) easing measures.

However assuming inflation meets expectations, EUR/GBP could be in for some solid advances if the BoE takes on a dovish tone in its meeting.

As the bank’s first meeting since it introduced an aggressive stimulus package in August, this highly anticipated meeting could mean that Britain’s August retail sales figures get brushed over even if they beat expectations.

If the BoE adopts a dovish tone and hints at the necessity of further easing down the line, Sterling will likely plummet.

However, if the bank plays up Britain’s economic activity since July and hesitates to indicate new easing, the Euro Pound exchange rate could fall as Sterling soars.