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Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Pairing Rises on Hawkish Commentary From European Central Bank President

Euro (EUR) Holding Gains Today in Spite of Lowering German Consumer Confidence Figure

Although German Consumer Confidence was shown to have fallen further than anticipated this morning, sliding to from 9.9 to 9.6, the common currency (EUR) remains up against many of the majors. Likely this is due to the continued positive influence of European Central Bank (ECB) President Mario Draghi’s comments on Wednesday that policymakers did not currently see the case for introducing new monetary loosening measures, which saw traders piling into the Euro. As such, the EUR/GBP exchange rate is presently on an uptrend at 0.7339.


With both Germany and the Eurozone as a whole posting declines on today’s raft of PMIs the EUR/GBP pairing has ended its recent run of gains to enter a mild downturn.

Pound (GBP) Turned Bearish with a Rise in UK Public Sector Borrowing and Dampened Bank of England (BoE) Rate Speculation

Although weaker than expected German Producer Prices on Monday had seen the single currency (EUR) soften, the EUR/GBP conversion rate was soon able to rally as yesterday saw the release of some disappointing data from the UK. Public Sector Net Borrowing was shown to have risen further than forecast in August, to 12.1 billion Pounds (GBP) instead of a more modest 9.2 billion. This was not encouraging news for traders as this higher government borrowing is evidence of a widening domestic deficit, significantly weakening the case for a Bank of England (BoE) interest rate rise in the coming months. In spite of previously hawkish comments from BoE Governor Mark Carney, this saw investors moving away from Sterling, sending the EUR/GBP pairing on a strong uptrend through much of the day.

Common Currency (EUR) Holds Steady against Soft Sterling (GBP) Today in Spite of Declining Eurozone PMIs

This morning, however, the Euro has been weighed down by the release of a raft of unimpressive German and Eurozone PMIs. Growth was shown to have declined across the board, with the majority of figures printing at lower levels than pundits had predicted. Lending further weight to speculation that the European Central Bank (ECB) will be forced to introduce fresh monetary loosening measures to combat stalling economic progress, this has pushed the EUR/GBP exchange rate into a slump today. As the afternoon will see commentary from ECB President Mario Draghi, which should clarify the key policymaker’s stance on any upcoming intervention from the central bank, trading on the EUR/GBP pairing is likely to remain cautious.

EUR/GBP Exchange Rate Forecast: Dovishness on German Consumer Confidence May Send the Pairing on Downtrend

Either the Pound or the single currency may stand to strengthen tomorrow, with the release of German Consumer Confidence and IFO business sentiment surveys alongside the UK’s August BBA Loans for House Purchase figure. Should the Eurozone results decrease beyond expectations, the Euro is unlikely to hold its current strength, particularly if Draghi proves dovish in outlook this afternoon. If local stock markets also continue to take a battering as the result of the unfolding Volkswagen emissions scandal the latter half of the week could prove bearish for the EUR/GBP currency pair.

Current EUR, GBP Exchange Rates

At time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate is on a downtrend in the range of 0.7239, with the Pound Sterling to Euro (GBP/EUR) pairing beginning to climb around 1.3810.