The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.55% on Thursday morning.
After British construction data showed output had weakened beyond expectations, the Pound slumped versus many of its major peers. With investors showing extra caution in the run-up to the general election, all evidence is pointing towards a bearish Pound Sterling.
The common currency, conversely, advanced versus most of its major rivals on Thursday morning. This is as a result of speculation that the latest reform proposal from Greece will be accepted by creditors, not least because this is the latest of several revisions. The Euro advance has been somewhat slowed, however, after European Central Bank (ECB) Executive Board member Sabine Lautenschlaeger questioned the effectiveness of the central bank’s bond-buying programme – Quantitative Easing.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7299.
Euro (EUR) Exchange Rate Gains as Grexit Potential Eases
On Wednesday Greece submitted updated reforms, pledging to pay the International Monetary Fund (IMF) on time. The Euro rallied in response amid speculation that this latest proposal will finally be acceptable from its creditor’s standpoint. ‘We sent a new document today to the Brussels Group (of EU/IMF lenders) which is more specific and quantified,’ a Greek finance ministry official told reporters.
Euro gains have been somewhat sluggish, however, after the ECB’s Sabine Lautenschlaeger called into question the effectiveness of quantitative easing in the Eurozone. ‘Given the low interest rates in the Eurozone, I have doubts, whether the economic impact of the purchasing programme will reach the desired level,’ she stated.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low today of 0.7251.
Pound Sterling (GBP) Exchange Rate Softens on Construction Output
Thursday’s solitary British data publication failed to meet with the median market forecast, which caused the Pound to slump versus most of its major peers. The Construction PMI was expected to drop from 60.1 to 59.8, but the actual result declined to 57.8.
David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said; ‘The construction sector’s strong recovery took on a gentler, quieter pace, with the housing sector continuing to lead the way ahead – but only just, and with the commercial sector a close second. A hint of restraint prevented employment levels rising much further. Some firms attributed slower momentum to concerns about the looming General Election, but new business still rose at a respectable pace compared to the average over the last few years.’
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Gains
Given the lack of domestic data to drive changes, and with the British general election weighing on investor confidence, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold gains for the remainder of Thursday’s European session.
Friday will probably see cooler EUR/GBP volatility given the complete absence of domestic data. Additionally, trade is likely to ease given that it is Good Friday.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7310 today.