Euro to Pound Sterling (EUR/GBP) Exchange Rate Trends Narrowly ahead of UK Data Today
Demand for Pound Sterling (GBP) is still limited on Wednesday morning, with investors awaiting the latest BBA Loans for House Purchase figure. As the ‘Brexit’ debate continues to intensify the Euro to Pound Sterling (EUR/GBP) exchange rate is nevertheless trending narrowly in the region of 0.7868 as the appeal of the single currency is equally dented.
While the Pound (GBP) remains generally out of favour on Tuesday morning, the Euro to Pound Sterling (EUR/GBP) exchange rate has failed to make further gains due to discouraging German data.
Pound Sterling (GBP) Slumped Sharply in Response to ‘Brexit’ Uncertainty
Monday’s Eurozone data proved generally less than encouraging, as the latest raft of domestic PMIs showed that the manufacturing and service sectors had continued to struggle across the currency union. Particularly discouraging was the revelation that Germany’s Manufacturing PMI had slipped far further than forecast from 52.3 to 50.2, narrowly remaining in growth territory in February. Despite a better-than-expected performance in the French manufacturing sector, which edged out of stagnation to post growth of 50.3, this latest sign of slowness within the Eurozone’s powerhouse economy saw the Euro (EUR) soften.
However, this failed to dent the bullish run of the Euro to Pound Sterling (EUR/GBP) exchange rate as the Pound (GBP) slumped severely across the board throughout Monday’s European session. This was in response to London Mayor Boris Johnson’s decision to campaign for a ‘Brexit’, with polls suggesting that Johnson is only second to Prime Minister David Cameron in terms of influence within the debate. As the date is now set for a June referendum, uncertainty is expected to weigh on the appeal of Sterling for some time to come.
Disappointing German Exports and Business Sentiment Weigh on Euro (EUR) Exchange Rate Today
Confidence in the German economy has continued to decline this morning, though, after the country’s fourth quarter exports were found to have contracted more severely than traders had anticipated. As exports sunk -0.6%, the negative impact of the wider global slowdown appears to have started to take a greater toll on Germany, prompting fresh worries about the economic outlook of the Eurozone as a whole.
Investors have been equally deterred from the single currency today by the February IFO Business Sentiment Survey. Although the current assessment component showed an unanticipated improvement, this was countered by a sharper slump in both the business climate and expectations measures. With optimism already dented, this weaker showing has seen the EUR/GBP exchange rate begin to cede some of its recent gains.
EUR/GBP Exchange Rate Forecast: BoE Comments Expected to Prompt Pound Volatility
Later in the day members of the Bank of England (BoE) Monetary Policy Committee (MPC) will be delivering testimony to MPs, with comments from Governor Mark Carney particularly likely to provoke further Sterling volatility. Should policymakers continue to take a more dovish tone with regards to the outlook of domestic monetary policy, and the local economy as a whole, the Pound could soon return to bearish form.
Current EUR, GBP Exchange Rates
At the time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending lower at 0.7790, while the Pound Sterling to Euro (GBP/EUR) pairing was on a slight uptrend around 1.2836.