European Commission Data Shows Improved Economic Confidence
The Euro advance has slowed this afternoon, despite the positive results from European Commission surveys which showed that economic confidence had risen. The data was mostly collected before the attacks on Paris, however, which could be why investors haven’t paid it too much attention.
The EUR/GBP exchange rate is trending in the region of 0.7039.
The Euro to Pound Sterling (EUR/GBP) exchange rate has seen volatile trading this week as positive economic data clashes with political instabilities in Portugal and Greece. All of this is played out against the overwhelming likelihood that the European Central Bank (ECB) will increase their €1.1 trillion asset purchasing programme and possibly cut interest rates in order to boost a stubbornly low rate of inflation.
EUR/GBP Exchange Rate Forecast: Euro Advances Despite Warnings Over Geopolitical Tensions
The Euro is trending up against Pound Sterling today, despite warnings from the European Commission regarding the effects geopolitical tensions could have on the Eurozone economy. Growth in the Euro-area is already forecast at 1.8% in 2016, while the US economy is predicted to grow 2.8%. Middle Eastern conflicts, terrorism and the largest number of refugees coming to Europe since the Second World War are all impacting the Eurozone economy.
At a press conference in Brussels, European Commission Vice President Valdis Dombrovskis said: ‘There are a number of conflicts in our neighbourhood and, as regards security challenges, of course this is something we need to pay particular attention to in the aftermath of the Paris terror attacks. It’s premature at this stage to draw far-reaching conclusions as regards the impact of those factors on the economy. We need to monitor those tendencies quite closely.’
Despite concerns, the Euro is currently trending up 0.3% on Pound Sterling, around 0.7040.
GBP/EUR Exchange Rate Forecast: UK Gross Domestic Product Holds Steady
UK Gross Domestic Product growth has held steady at 2.3% as predicted for the third quarter, showing the 11th consecutive quarter of growth. The uptrend has not been consistent however and while Q3 growth of 0.5% is better than the dip in Q1 figures to 0.3%, it represents a fall on Q2 levels of 0.7%.
While the services industry expanded by 0.7% in the most recent quarter, industrial output was 0.1% weaker than expected at 0.2% and construction output continued to shrink at a rate of -2.2%. Manufacturing slowed over the summer, with the sector contracting -0.4%. This means that the services sector is currently the only part of the UK economy that is bigger now than it was before the 2008 financial crisis. Production is the worst performing component, with a score of around 90 points on the growth index.
The UK’s trade gap widened again after making a positive impact in the second quarter, lowering GDP by 1.5% – the worst contribution for 18 years.
The UK’s only other big impact data release was the GfK Consumer Confidence Survey, which showed that consumer confidence fell 1 point to the lowest level since May this year.
The GBP/EUR exchange rate is currently trending between 1.4172 and 1.4247.
EUR/GBP Exchange Rate Forecast: UK and Eurozone Data to Come
While all the day’s important releases have been released, there are still Eurozone confidence survey figures to come, which could help to push the Euro even further in the wake of disappointing statistics accompanying the UK GDP.
The EUR/GBP exchange rate is currently trending in the region of 1.4172 and 1.4247.