The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a narrow range on Tuesday morning.
Despite the fact that German Retail Sales produced a positive result on Tuesday morning, the Euro is generally holding steady. This is as a result of ongoing anxieties that Greece will require additional support once their bailout extension is over.
The Pound, similarly, is holding steady versus its most traded rivals despite positive construction data. The sluugish Sterling movement is likely to be a result of trader reluctance to invest heavily in the Pound ahead of the forthcoming general election.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7271.
The Euro to Pound Sterling (EUR/GBP) exchange rate rallied by around 0.61% on Monday afternoon.
Having avoided the hazards of a Grexit and further sanctions on Russia, the shared currency strengthened versus most of its major peers. Fears that the European Central Bank (ECB) would fail to source bonds to fund quantitative easing have also abated, which aided the common currency appreciation. Additional gains can be attributed to positive domestic data.
The Pound, meanwhile, is generally softer versus many of its most traded competitors after domestic data produced varied results which err towards the negative. The forthcoming general election is also weighing on the British asset, with political uncertainties provoking cautious investment.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7296.
Euro (EUR) Exchange Rate Gains on Eurozone Inflation
European data printed positively on Monday which allowed the Euro to strengthen versus many of its major rivals. The Eurozone Core Consumer Price Index equalled the median market forecast in February, and the Eurozone CPI Estimate bettered the market consensus of -0.5%, with the actual result reaching -0.3%.
Perhaps the most positive data result, however, came from the Eurozone Unemployment Rate, which saw a positive decline to 11.2% despite expectations that unemployment would increase. ‘February’s continued fall in Eurozone consumer prices and the still high rate of unemployment in January confirm that the ECB faces an uphill battle against the threat of deflation,’ said Jennifer McKeown of Capital Economics.
The improvement in the consumer price report ‘failed fully to reverse last month’s fall and the rate is still lower than at any other time since 2009,’ McKeown added.
The Euro to Pound Sterling (EUR/GBP) exchange rate has fallen to a low today of 0.7240.
Pound Sterling (GBP) Exchange Rate Edges Lower ahead of General Election
As we draw closer to the British general election political unknowns are weighing heavily on the Pound. With the anti-European Union political party UKIP gathering momentum, and with the Conservatives promising an EU referendum if they claim victory, traders are treading cautiously with regards to Sterling investment.
Most British economic data printed poorly on Monday, which confirmed the Pound’s declination. House Prices, Mortgage Approvals, Net Consumer Credit and Net Lending Securities on Dwellings all failed to meet with market consensuses.
The Manufacturing PMI, however, did improve having strengthened from 53.1 to 54.1, eclipsing the median market forecast of a rise to 53.4.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Gains
Given the divergent domestic data results, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold its advance for the remainder of Monday’s trade. Tuesday is likely to see EUR/GBP volatility with German Retail Sales and the British Construction PMI due for publication.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high today of 0.7302.