The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened by around 0.28% on Tuesday morning.
European Central Bank (ECB) President Mario Draghi gave a speech in Frankfurt on Monday in which he expounded his belief that the Eurozone is headed for recovery, albeit steady. He also stated that the program of quantitative easing is already having a positive affect at this early stage. As a result of this speech, the single currency advanced versus many of its most traded currency competitors.
The Pound, meanwhile, softened versus the majority of its most traded currency competitors on Tuesday morning. This is as a result of a cloudy outlook for the Pound amid political uncertainties as we draw ever closer to the general election.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7153.
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.39% on Monday afternoon.
As traders await a speech from European Central Bank (ECB) President Mario Draghi, the shared currency strengthened versus most of its major competitors. The Euro uptick indicates that traders expect Draghi to be more open about the asset purchasing scheme launched a week ago.
The Pound, meanwhile, softened versus many of its most traded currency rivals after house prices cooled. Sterling did manage to hold gains against some of its rivals, however, with speculation that quantitative easing in the Eurozone will be beneficial for the British economy.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7150.
Euro (EUR) Exchange Rate Ticks Higher before ECB Officials Speak
The general opacity of the ECB of late, with particular reference to the bonds sourced to finance quantitative easing, caused significantly dampened sentiment towards the institution. The shared currency strengthened on Monday, however, with many analysts expecting President Mario Draghi to give a detailed account of the asset-purchase scheme launched a week ago.
‘In the first three days of last week they were very active and then from what we’ve heard (ECB activity) diminished quite a lot,’ said Piet Lammens, a strategist at KBC. ‘There has been a lot of scepticism about the ability of the ECB to buy in the market … so probably they wanted to show that they have enough sellers out there. Maybe now they say ‘we have made our point and we would go more softly in the next few weeks’ or they will continue to show their power.’
The Euro to Pound Sterling (EUR/GBP) exchange rate has fallen to a low today of 0.7104.
Pound Sterling (GBP) Exchange Rate Edges Lower on House Prices
Although house prices still registered impressive growth in March, the advance was cooler than previous figures. This caused the Pound to soften given the lack of significant data to provoke changes.
March’s Rightmove House Prices increased by 5.4% on the year, slightly below the previous growth of 6.6%. Monthly house prices showed a growth of 1.0% in March, which was slightly below February’s score of 2.1%. Analysts have linked house price growth to cash-rich pensioners making purchases in order to rent.
Ken Hume of James Alexander in Norbury, south-west London, said; ‘We’ve had inquiries from a number of older people considering buy-to-let which is likely to have an effect this year, with interest expressed particularly in smaller flats where yields are higher. As this end of the market is not as busy in our local area, these buyers are a welcome addition, especially as they are often 100% cash.’
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Gains
Although Draghi’s speech has the potential to provoke volatility for the single currency, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold gains for the remainder of Monday’s trade. This is due to heightened speculation that the speech will reiterate encouraging signs at this early stage of quantitative easing in the Eurozone.
Tuesday ought to see significant EUR/GBP volatility with several influential European data publications due. In particular, the German ZEW Survey for Economic Sentiment will be of significance.
The Euro to Pound Sterling (EUR/GBP) exchange rate reached a high of 0.7165 today.