Euro (EUR) Exchange Rate on Bullish Form in Anticipation of German Unemployment Figures Today
Ahead of the latest German and Eurozone unemployment data the Euro (EUR) has continued to make strong gains against the Pound (GBP). While a draft proposal for reforming the UK’s relationship with the EU is expected to begin circulating later today this has done nothing to alleviate traders’ persistent ‘Brexit’ concerns. As a result the Euro to Pound Sterling (EUR/GBP) exchange rate is on an uptrend around 0.7598.
Despite uncertainty over the UK’s future role in the EU, the Euro to Pound Sterling (EUR/GBP) exchange rate has been ceding ground today following weaker Eurozone manufacturing data.
‘Brexit’ Fears Drag on Pound Sterling (GBP) Exchange Rate as Cameron Negotiations Stall
The appeal of the Pound (GBP) remained limited ahead of the weekend as Prime Minister David Cameron headed to Brussels for the latest round of negotiations with regards to the UK’s future in the European Union. As talks with European Commission President Donald Tusk failed to yield a significant breakthrough on Cameron’s key demand of restricting in-work benefits for EU migrants, the upcoming ‘Brexit’ referendum is likely to come later rather than sooner. With the uncertainty over the UK’s future in Europe weighing heavily on the outlook of the Pound, as well as the odds of the Bank of England’s (BoE) position on interest rates changing, this has done little to encourage traders to return to the softened currency.
Weaker Eurozone Manufacturing PMIs Weigh on Euro (EUR) Today as Odds of ECB Easing Rise
However, confidence in the Euro (EUR) suffered a blow on Monday morning as the latest round of Eurozone Manufacturing PMIs proved generally disappointing. Despite an unexpectedly strong surge in Spanish sector growth, which rose from 53 to 55.4 in January, manufacturing widely slowed across the currency union. Both France and Greece reported stagnation while expansion in Germany and Italy fell back on the month, suggesting that global slowdown pressures have been coming to bear on the Eurozone economy. As the more underwhelming performance pulled down the overall Eurozone Manufacturing PMI from 53.2 to 52.3 the likelihood of the European Central Bank (ECB) opting to introduce further monetary loosening measures in March seems to be increased.
On the other hand, the UK manufacturing sector got off to a somewhat stronger start to the year to surprise investors with an uptick from 51.9 to 52.9. Reassuring pundits, this has prompted the Euro to Pound Sterling (EUR/GBP) exchange rate to trend lower today.
EUR/GBP Exchange Rate Forecast: Euro Predicted to Strengthen on Steady German Unemployment Rate
The single currency will be looking to rally on tomorrow’s German unemployment data, although the number of unemployed is forecast to fall a little less than in December. Nevertheless, as the domestic Unemployment Rate is expected to hold steady at 6.3% the robustness of the Eurozone’s powerhouse economy is likely to bolster the appeal of the Euro. As global stock markets struggle to maintain a more bullish outlook following weak Chinese data the common currency could equally be shored up by increased safe-haven demand.
Should the UK’s latest Construction PMI also better forecast, however, Sterling may remain more dominant ahead of this week’s BoE interest rate decision and inflation report.
Current EUR, GBP Exchange Rates
At the time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending lower around 0.7586, while the Pound Sterling to Euro (GBP/EUR) pairing was making gains at 1.3174.