GBP/EUR Exchange Rate on Narrow Trend Today in advance of UK GDP Data
Ahead of today’s UK GDP report the EUR/GBP exchange rate is trending narrowly in the region of 0.7202. Investors remain cautious ahead of the crucial third quarter economic growth gauge, as any weakening is likely to push off the odds of a near-term Bank of England (BoE) interest rate rise further into 2016.
In spite of a stronger showing on the German IFO Business Sentiment Surveys, trade on the Euro (EUR) has remained generally dovish today.
Dovish European Central Bank (ECB) Triggered EUR/GBP Exchange Rate Slump
Ahead of the weekend the Euro to Pound Sterling (EUR/GBP) exchange rate saw a significant slump on the back of dovish talk from European Central Bank (ECB) President Mario Draghi. Indicating that policymakers had discussed the possibility of an interest rate cut in the near future as well as an expansion of the central bank’s quantitative easing program, Draghi successfully talked the Euro (EUR) down to a two-month low against the Pound (GBP). As Friday saw a weaker than expected German Manufacturing PMI for October, in spite of stronger showings on the Eurozone’s Services and Manufacturing figures, the common currency extended its losses as the EUR/GBP pairing slipped to 0.7175.
German IFO Business Climate and Expectations Surveys Better Expectations Today, Euro (EUR) Downtrend Persists
Although European markets had been boosted on Friday by the news that the People’s Bank of China (PBoC) would be cutting interest rates once again, traders returned to a more cautious stance on Monday as global slowdown fears persisted. However, the single currency received a boost from the latest IFO Business Sentiment Surveys as both the Business Climate and Expectations indexes printed at higher levels than had been anticipated. While the Current Assessment reading was decidedly more dovish, likely driven by the negative impact that the Volkswagen emissions scandal may have on the German economy, this was not sufficiently bearish to counteract the more positive results.
Nevertheless, with the UK’s upcoming BBA Loans for House Purchase figure forecast to demonstrate an uptick in the housing market it was ultimately not long before the EUR/GBP exchange rate returned to more bearish form.
EUR/GBP Exchange Rate Forecast: Pound to Remain Bullish as Third Quarter UK GDP Predicted to Hold Steady
Tomorrow’s third quarter UK Gross Domestic Product could weigh down the EUR/GBP conversion rate further should the figure demonstrate that the domestic economy remains relatively robust, in spite of negative global headwinds. If this gauge of economic growth does not disappoint this could add further fuel to bets that the Bank of England (BoE) could move towards raising interest rates sooner rather than later, increasing the appeal of Sterling.
Later in the week the single currency may extend its slump as the November German Consumer Confidence Survey is expected to slide from 9.6 to 9.4. If confidence within the Eurozone’s powerhouse economy is shown to have fallen there is likely to be little incentive for pundits to return to the Euro.
Current EUR, GBP Exchange Rates
At time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was on a downtrend in the range of 0.7186, while the Pound Sterling to Euro (GBP/EUR) pairing made gains in the region of 1.3916.