Continuing to reel from the Bank of England (BoE) interest rate disappointment, the Pound (GBP) remained weak to keep the EUR/GBP exchange rate trending highly.
Dovish Conclusions from Bank of England Data Ended Hawkish Run for Pound (GBP) to Boost EUR/GBP Exchange Rate
Movement on Thursday was kicked off by the German month-on-month Factory Orders which rose far past forecast, coming in at an increase of 2% rather than the anticipated 0.3%. A strong indicator that the Eurozone’s leading economy is returning to its usual robust form, this result bolstered the Euro (EUR) to help prevent it from striking a new monthly low as speculators positioned themselves in advance of the afternoon’s Bank of England (BoE) data.
It was ultimately a turbulent day for the Pound (GBP), however, as so-called ‘Super Thursday’ resulted in a round of dovish trading across the board. Defying expectations, the BoE Monetary Policy Committee (MPC) voted by 8-1 in favour of leaving the interest rate at its current level of 0.5%, surprising traders who had been banking on two or even three dissenters in the session. Effectively banishing the chances of a hike coming before the end of the year, the minutes swiftly pushed down Sterling to give the EUR/GBP exchange rate a healthy boost up to 0.7039.
Eurozone Posts Mixed Industrial Production Results, Euro (EUR) Remains Dominant over Softened Sterling (GBP)
Strengthening the common currency further this morning the German Balance of Trade posted a surplus of 24.4 billion Euros, which was up on both the previous month’s figure and the forecast. However, this was immediately followed by much worse than anticipated Industrial Production numbers for Germany before the single currency could take any advantage. Month-on-month production for the nation decreased by 1.4%, by far the worst drop the figure has seen in the last year. France fared similarly badly, contracting by 0.1%, while Spain bucked the trend to rocket ahead of forecasts to post growth of 4.5%. Not for the first time Spanish data helped prevent the Euro taking too much of a blow, as the EUR/GBP exchange rate only dipped slightly to 0.7037.
The UK’s Balance of Trade, on the other hand, saw the deficit widen today. Falling to -9.18 billion from the previous month’s -8.42 billion, the balance was nevertheless lower-than-expected and consequently gave the Pound something of a boost.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Common Currency Likely to Keep Pairing on Upwards Trend as Pound Waits to Rally
Things stand to be a somewhat quieter going into the next week, with no major data releases for the UK or Eurozone until Tuesday. The Germany Economic Sentiment Index may well recover some lost ground for the single currency should it demonstrate more optimistic sentiment, with the potential to shore up the EUR/GBP exchange rate further. Any news from Greece could also prompt movement, be it either positive or negative.
A rally is not out of the question for the Pound though. Wednesday’s unemployment statistics and Average Earnings for the UK could restore a degree of bullishness to the currency should they exhibit particular improvement.
Current EUR, GBP Exchange Rates
At time of writing the EUR/GBP exchange rate is trending at 0.7080, with GBP/EUR in the region of 1.4119.