Euro (EUR) Exchange Rate Trends Lower ahead of ECB Policy Meeting
Confidence in the Euro (EUR) remains volatile ahead of the European Central Bank’s (ECB) policy meeting on Thursday, with investors still uncertain over the extent of any monetary loosening measures policymakers may choose to adopt. As a result the Euro to Pound Sterling (EUR/GBP) exchange rate has returned to a downtrend on Wednesday morning, trending in the region of 0.7726.
As uncertainty builds over the likelihood of the European Central Bank (ECB) opting to loosen monetary policy further the Euro (EUR) has continued to strengthen on Tuesday morning.
German Factory Orders Shored up Euro to Pound Sterling (EUR/GBP) Exchange Rate
The appeal of the Euro (EUR) was bolstered yesterday as Germany’s January Factory Orders proved better than expected, with growth in orders rising from -2.2% to 1.1% on the year. While the Eurozone Sentix Investor Confidence Index for March conversely failed to strengthen as far as forecast, falling to 5.5 rather than rising to 8.3, this was not enough to prevent the Euro to Pound Sterling (EUR/GBP) exchange rate making renewed gains.
A stronger showing from the Eurozone’s powerhouse economy offered some measure of reassurance for the longer-term outlook of the currency union, although this equally encouraged speculation that the European Central Bank (ECB) may not opt for as great a degree of monetary loosening as traders expect on Thursday.
Pound Sterling (GBP) remained largely overshadowed by ‘Brexit’ worries, meanwhile, particularly as the resignation of British Chambers of Commerce director John Longworth following a pro-leave speech triggered a fresh round of intense debate.
Euro (EUR) Exchange Rate Strengthens after Eurozone GDP Betters Forecast Today
Following the latest BRC Like-For-Like sales report the appeal of the Pound has continued to diminish today, as confidence in the strength of the domestic economy wanes. Retail demand slowed sharply on the year from 2.6% to 0.1%, suggesting that consumer sentiment has weakened considerably and giving investors little reason to favour the softened currency.
This morning’s German Industrial Production figures bettered expectations, clocking in at 2.2% rather than -1.6% to offer further support for the idea that the Eurozone’s powerhouse economy is in stronger health than previously thought. As the Eurozone’s fourth quarter GDP also proved more bullish the odds of the ECB voting to ease policy further have been seen to have weakened somewhat, encouraging speculation that President Mario Draghi will under-deliver once again.
EUR/GBP Exchange Rate Forecast: Improved UK Industrial Production to Boost Pound Sterling Demand
A stronger showing on tomorrow’s UK Industrial and Manufacturing Production figures, however, could bolster the appeal of the Pound. Forecasts suggest that domestic production recovered somewhat at the start of the year, a result which is likely to offer reassurance to investors as the UK economy looks set to be weighed down by referendum worries for some months to come.
Ahead of Thursday’s ECB meeting the Euro may continue to strengthen if traders are increasingly confident of the likelihood of another disappointment. Nevertheless, if policymakers opt to loosen monetary policy significantly at this juncture the single currency can be expected to suffer a fresh bout of softness.
Current EUR, GBP Exchange Rates
At the time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was making gains around 0.7748, while the Pound Sterling to Euro (GBP/EUR) pairing was slumped in the region of 1.2906.