EUR/GBP Conversion Rate Ticks Lower on Paris Attacks
The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.3% on Monday afternoon.
With last Friday’s tragic terrorist attacks in Paris weighing on trader sentiment, the shared currency is holding a weak position versus its major peers. France have retaliated with air-strikes on Syria, exacerbating fears of a full-scale war which is likely to add to the current refugee crisis. Now that France has tightened its border controls and added a number of new anti-terror initiatives, demand for the common currency is likely to remain damp for some time to come.
Even better-than-expected inflation data wasn’t enough to provoke a Euro uptrend. However, the improvement in Eurozone inflation may have long-term positive ramifications with the European Central Bank (ECB) likely to avoid loosening policy in December if consumer prices continue to rise. Whilst October’s Eurozone Consumer Price Index equalled the market consensus of a drop from 0.2% to 0.1% on the month, the annual figure surprised to the upside having risen from 0.0% to 0.1%. In addition, Core Eurozone Consumer Prices in October came in at 1.1% despite the median market forecast being 1.0%.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7048.
GBP/EUR Conversion Rate Predicted to Tick Higher despite Housing Bubble Concerns
Last week’s British housing data suggested that a bubble is inflating and could potentially price-out first time buyers. This is mostly due to a lack of supply with the construction sector having performed weakly of late. However, the prospect of a number of new orders rolling in should see construction pick up in the fourth quarter. Today, November’s Rightmove House Prices advanced by 6.2% on the year; further adding to housing bubble fears. With that being said, however, monthly Rightmove House Prices contacted by -1.3%.
Rightmove’s housing market analyst, Miles Shipside, said: ‘Those looking to market their property as Christmas gets closer often have a greater sense of urgency to find a buyer and sensibly recognise that trimming their asking price will provide an incentive to potential buyers more focused on seasonal Christmas trimmings. Buoyant market conditions and a confident outlook for 2016 mean that the reduction, while no doubt welcome to hard-pressed buyers, is the most Scrooge-like since 2011. It’s likely to be a shortlived respite as the combination of high confidence and low interest rates is a recipe for higher prices next year.’
With the exception of the Euro, the Pound softened versus its currency rivals in response to the Paris attacks. There is growing paranoia that the UK will be the next ISIS target, a fear fuelled by Prime Minister David Cameron who is considering tightening security measures and introducing new anti-terror initiatives. In addition, the UK will likely be one of France’s greatest allies in the war against ISIS which will feed into trader uncertainty.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7028 during Monday’s European session.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Gains on Damp Trader Sentiment
Given that even positive Euro-area inflation data wasn’t enough to provoke single currency gains, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold moderate losses for the remainder of Monday’s European session.
Tuesday is likely to see significant volatility with the British Consumer Price Index due for publication. This is particularly important given that the Monetary Policy Committee (MPC) highlighted the absence of price pressures as one of the major stumbling blocks preventing an immediate overnight cash rate hike. In terms of European data tomorrow, the Eurozone Economic Sentiment Survey has the potential to provoke EUR volatility.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7080 during Monday’s European session.