As Monday’s European session progressed the single currency softened versus its major peers despite a weakening US Dollar. The depreciation is likely the result of mounting concerns that the ECB will ease policy dramatically on Thursday.
Meanwhile the British Pound has seen comparatively subdued trade today thanks to a complete absence of domestic data.
The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.2% to trend in the region of 0.7722 towards the close of Monday’s European session.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Tick Higher Irrespective of Mixed European Ecostats
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.1% on Monday morning.
European economic data produced a mixed-bag of results today. German Factory Orders managed to better estimates in January on both an annual and monthly basis. However, while the monthly contraction of -0.1% bettered the -0.3% forecast, the result is far from encouraging.
Offsetting these better-than-anticipated results, March’s Eurozone Investor Confidence unexpectedly dropped from 6.0 to 5.5, failing to meet with the forecast rise in confidence to 8.3.
Also weighing significantly on demand for the common currency is speculation that the European Central Bank (ECB) will look to employ aggressive stimulus measures as Thursday’s monetary policy meeting approaches.
‘You have the ECB policy which is generally going to be cutting rates, expanding QE and that tends to weaken the Euro,’ said Richard Cochinos, London-based head of Europe Group-of-10 currency strategy at Citigroup Inc.
Further downside pressure can be related to a stronger US Dollar as traders flock to safe-haven assets. After the US Dollar softened on Friday in response to less-than-ideal labour market data, traders have taken advantage of the comparatively low trade weighting.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7741.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Losses despite Easing ‘Brexit’ Fear
Now that the initial shock from the announcement that the UK referendum will be held on June 23rd has passed, the resultant depreciation has temporarily abated. Last week saw Sterling rack up notable gains versus its major peers thanks to corrective trading amid concerns that the initial slump was overdone.
There will be a distinct lack of influential domestic data this week, with a complete absence of UK ecostats today. This should see the Pound endure volatility in response to political developments regarding the EU referendum.
There is potential for the Pound to extend gains versus its major rival this week as we draw closer to the ECB policy decision. With most traders certain that the ECB will ease policy dramatically on Thursday, the corresponding Euro selloff should see the UK asset profit.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7746 during Monday’s European session.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: US Labour Market Conditions Data to Provoke Volatility
Given that there will be no further domestic data publications pertaining to either the UK or Eurozone today, there is a high chance that the EUR/GBP exchange rate will hold modest gains for the remainder of Monday’s European session.
With that said, however, there is the potential for volatility in response to US data thanks to EUR/USD negative correlation. February’s US Labour Market Conditions Index Change will therefore be closely watched by those invested in the common currency.
The Euro to Pound Sterling (EUR/GBP) exchange rate reached a high of 0.7750 during Monday’s European session.