Euro to Pound Sterling (EUR/GBP) Exchange Rate Trends Narrowly Today
Ahead of today’s UK Construction PMI the Euro to Pound Sterling (EUR/GBP) exchange rate is trending narrowly in the region of 0.7781. Sentiment towards the single currency (EUR) has remained dovish on Wednesday morning, with forecasts suggesting only a limited uptick in the latest Eurozone Producer Price Index figures.
With the European Central Bank (ECB) expected to imminently loosen monetary policy, the Euro to Pound Sterling (EUR/GBP) exchange rate has remained in a slump on Tuesday morning.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Dipped after Disappointing Eurozone CPI
Traders are increasingly confident that the European Central Bank (ECB) will opt to expand its monetary loosening measures at its March meeting after February’s Eurozone Consumer Price Index fell markedly short of forecast. Inflation within the currency union fell back from 0.3% to -0.2% as downside risks continue to weigh on the strength of the domestic economy, increasing the pressure on policymakers to act more decisively. Consequently the Euro (EUR) saw a sharp dip across the board, as investors were inclined to favour its rivals.
Demand for Pound Sterling (GBP), meanwhile, began to pick back up on Monday as ‘Brexit’ volatility began to diminish somewhat. Sentiment was also bolstered by stronger Net Consumer Credit and Mortgage Approvals figures, as both showed greater improvement than pundits had expected.
Stronger Eurozone Unemployment Fails to Bolster Euro (EUR) Exchange Rate Today
The Euro to Pound Sterling (EUR/GBP) exchange rate has continued to trend lower today as the latest raft of Eurozone data failed to provide sufficient incentive to bolster the single currency. Manufacturing across the currency union proved generally weaker in February as global slowdown concerns and market volatility weighed on expansion.
While the Eurozone’s Unemployment Rate surprisingly fell to a four-year low of 10.3% in January the bullish impact of this result was counteracted by the February German Unemployment Rate, which held steady at 6.2%. As this is unlikely to deter the ECB from easing further the Euro has remained softer.
In spite of the latest UK Manufacturing PMI demonstrating an unexpectedly sharp decline in sector growth by falling from 52.9 to 50.8 the Pound has been making fresh gains this morning. Largely this resilience appears to be due to market consolidation, with investors taking advantage of the currency’s recent decline.
EUR/GBP Exchange Rate Forecast: Improved UK Construction PMI to Support Pound Sterling
Wednesday’s UK Construction PMI could prompt further Pound appreciation if the sector is confirmed to have expanded strongly, with traders expecting an uptick from 55 to 55.5 on the month. Although the impact of recent economic uncertainty is unlikely to have substantially dragged on the February figure a stronger showing could offer some reassurance to markets, bolstering the appeal of the Pound.
Upcoming commentary from ECB policymakers may dent the common currency, on the other hand, with any dovish assertions expected to drive the EUR/GBP exchange rate lower as the odds of March easing increase.
Current EUR, GBP Exchange Rates
At the time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was slumped at 0.7766, while the Pound Sterling to Euro (GBP/EUR) pairing was making gains in the region of 1.2874.