The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending down ahead of another speech by European Central Bank (ECB) President Mario Draghi, which could provide traders with a stronger indication of where monetary policy is heading.
EUR/GBP Exchange Rate Trending Lower as German Consumer Price Index Shows No Movement
The EUR/GBP exchange rate has slumped back to the levels experienced before the Bank of England’s (BoE) ‘Super Thursday’ announcements caused Pound Sterling to drop significantly. The Euro is currently trending lower in the face of some positive UK employment data and a lack of movement in the German Consumer Price Index. Both Month-on-Month (MoM) and Year-on-Year (YoY) figures remained steady at 0.0% and 0.3% respectively. Reports due out later are expected to show that German Industrial Production is contracting at a slower pace, with the figure improving from -0.5% to -0.1%.
ECB President Mario Draghi is due to testify to lawmakers in the European Parliament today. Uncertainty over ECB monetary policy has affected the Euro all week. Comments that hint at more economic stimulus would provide more direction for the markets, although there is a lot more information due out before the ECB makes their decision in December.
Executive Board member of the European Central Bank (ECB) Benoit Coeure explained yesterday that ‘the question we’re currently asking ourselves is the following: certain specific factors such as the drop in commodity prices, are they temporary? Or will they prevent the return to inflation of near 2% in a durable way? If the answer to the second question is positive, then additional measures will be taken. We’ll decide in December based on the information at our disposal.’
Down around 0.3%, the EUR/GBP exchange rate is currently trending in the region of 0.7065.
GBP/EUR Exchange Rate Forecast Sees Pound Sterling Trending Up After UK Employment Reports
Positive data from yesterday’s UK employment reports has seen Pound Sterling trading high against the common currency. After dropping across the board following dovish comments by the BoE, GBP has remained low thanks to a lack of economic data to drive it either up or down. Hitting a seven-year low, unemployment fell to 5.3%, with an Employment Change of 177k. These positive indicators were stymied by a higher-than-expected Jobless Claims Change of 3.3k and Average Weekly Earnings failing to rise above the 3.0% mark.
The GBP/EUR exchange rate is currently trending between 1.4114 and 1.4203.
EUR/GBP Exchange Rate Forecast: Gross Domestic Product Figures May Push Euro Back Up
French, German, Italian and Eurozone Gross Domestic Product reports are due out tomorrow. French GDP is expected to rise 0.3%, while non-seasonally-adjusted German GDP is forecast to print at 1.8%, up 0.2% Year-on-Year (YoY). Italian GDP is also expected to rise, growing 1.0% YoY, up from 0.7%. The total Eurozone Trade Balance for September is expected to rise from 11.2 billion to 16 billion.
The key release will be the seasonally-adjusted YoY Eurozone Gross Domestic Product, with analysts predicting a 0.2% rise to 1.7%.
The EUR/GBP exchange rate is currently trending between 0.7038 and 0.7080.