EUR/GBP Experiences Limited Movement as Data Remains Light
Currently only narrowly down on the new week’s opening levels 0.7942, the Euro to Pound Sterling exchange rate saw little to no inspired direction in Monday’s session despite briefly jumping to a high of 0.7989. The pair still remains close to last Friday’s levels.
The Pound currently holds back a weakened Euro’s advances as most ‘Brexit’ warnings issues by Chancellor George Osborne are similar to previous warnings and the Pound is already considerably volatile as a result of EU referendum discourse.
Euro (EUR) investors are hesitant to rush to the Euro in response to poor UK news as the Eurozone’s concerns fare little better. European Central Bank (ECB) discussions are likely to light up forex markets this week ahead of the bank’s meeting on Thursday.
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The Euro to Pound Sterling (EUR/GBP) exchange rate appears set to remain down on the week’s opening levels, with movement in the pair limited after yesterday’s busy data day.
Beginning the week at a high 0.8088, the pair has since plunged around -150 pips as the Pound enjoyed its first bit of good news in a while this week. The Bank of England’s (BoE) key rate decisions may have left investors disenchanted, however, as the pair has trended around 0.7964 since Thursday.
Investors Cautious of Euro (EUR) Despite Eurozone CPI
March’s final Eurozone Consumer Price Index (CPI) report was released yesterday and printed largely as expected – with a small yet notable change in the year-on-year result.
Deflation concerns have been driving European Central Bank (ECB) policy for some time, so the central bank probably breathed a slight sigh of relief as the YoY CPI score came in at 0.0%, escaping deflation of -0.2% despite estimates that it would only narrow to -0.1%.
However, this was unable to inspire much Euro strength as investors remain wary of the shared currency. Some members of the Eurozone’s financial sphere have become embroiled in rows this week as the ECB is criticised – and defended – for its extensive easing measures.
Eurozone trade balance data released this morning put the region’s surplus at a disappointing 20.2b, below forecasts of 21.5b.
Bank of England (BoE) Predictability Leaves Pound (GBP) Uninspired
The Bank of England released its latest rate decisions as well as its meeting minutes during Thursday’s session, and the results were largely unsurprising to investors.
The key interest rate was held at 0.50% for the 85th consecutive month, and (as expected) the central bank suggested that rates could be cut further if the UK ‘Brexit’s from the EU in June.
The minutes also revealed a further series of warnings on the possibility of Britain leaving the European Union, including official acknowledgement of how anxiety towards the vote itself has slowed the economy, the BBC reports;
“There are some signs that uncertainty relating to the EU referendum has begun to weigh on certain areas of activity, as some decisions, including on capital expenditure and commercial property transactions, are being postponed pending the outcome of the vote,” policymakers said in their minutes of the meeting.
However, despite the gloomy tone adopted by the central bank, the Pound only suffered losses of around -20 pips during yesterday’s session, as for the most part all the given information was already known by analysts and investors.
British construction output released this morning printed a disappointing advancement of 0.3% despite estimates it would improve to 0.7%, though it was better than the previous month’s figure of -0.9%.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Interest Rate Decision, UK Jobs Data Ahead
Today’s economic calendar is all but bare for the Euro to Pound Sterling pair.
Fresh data released earlier, including British construction and Eurozone trade balance, while not as vital as yesterday’s releases, could increase the volatility of the GBP/EUR pair throughout the day as both sets of figures disappointed analyst expectations.
Investors will instead turn their eyes towards the global market and the International Monetary Fund’s (IMF) ‘2016 Spring Meetings’ as the week draws to an end.
The meeting sees the IMF and World Bank Group (WBG) discussing a series of global economic issues in events throughout the weekend, and any strongly hawkish or dovish comments are likely to cause investor reactions.
Euro anxiety is also likely to rise as the European Central Bank’s next key rate decision takes place next week – and many are still reeling from the shocking outcome of the March gathering.
Next week’s UK employment figures are also likely to be cause of EUR/GBP movement.
The Euro to Pound Sterling (EUR/GBP) exchange rate currently trends around 0.7947 while the Pound Sterling to Euro (GBP/EUR) exchange rate trends in the region of 1.2582.