Improved UK Nationwide House Prices Fail to Hold up Pound (GBP) Today
Although this morning has seen the UK’s Nationwide House Prices reading for October print slightly higher than expected, at 3.9% rather than 3.8%, the EUR/GBP exchange rate has remained on an uptrend. Sentiment towards the Pound (GBP) remains weighed down by the weak third quarter GDP results today, as the Euro (EUR) awaits the latest German unemployment data.
In spite of lower German Consumer Confidence and Volkswagen’s first quarterly loss since 2000, the EUR/GBP exchange rate is holding on to gains this morning.
Pound Currency News: GBP Slumped as UK Gross Domestic Product Slowed
The appeal of the Pound (GBP) took a significant blow yesterday with the release of the UK’s third quarter GDP report, which showed that economic growth had slowed both on the quarter and on the year. While investors had been anticipating a slump in quarterly growth, the actual result of 0.5% was somewhat weaker than expected, pushed down by a sharp contraction within the domestic construction industry. This did not bode well for the odds of a nearer-term Bank of England (BoE) interest rate rise, as the strength of the national economy remains decidedly fragile, with traders concerned by the increasingly unbalanced nature of the domestic recovery.
Although the dovishness of European Central Bank (ECB) President Mario Draghi and the prospect of imminent monetary loosening continued to overshadow the single currency (EUR) at the beginning of the week, the EUR/GBP exchange rate nevertheless entered an uptrend.
Euro (EUR) Exchange Rate on Uptrend Today despite Lower German Consumer Confidence and Import Prices
While Sterling remains weighed down by the weak economic growth of the UK today, the Euro has continued to make gains. The German Consumer Confidence Survey for November printed at a slight decline as anticipated this morning, slipping from 9.6 to 9.4, as the impact of the Volkswagen emissions scandal dampened local optimism. Similarly disappointing were the September German Import Price Index readings, as the year-on-year figure showed a more severe contraction than forecast at -4%. However, in spite of these discouraging results from the Eurozone’s powerhouse economy and the news that Volkswagen had suffered its first quarterly loss in fifteen years, the single currency has proved surprisingly resilient.
EUR/GBP Exchange Rate Forecast: Pound Hoping to Strength on Upcoming Housing Data
Several UK data releases are set for publication tomorrow, including the Nationwide House Prices, Net Consumer Credit and Mortgage Approvals figures. With forecasts pointing to some relatively reassuring results, including an expected increase in domestic mortgages, this could offer the potential for a Pound rally. Even so, a strong showing here might not be entirely enough to counteract the present GDP slowdown concerns.
The common currency will likely see some volatility on Thursday as a result of the October German unemployment data. Although the Unemployment Rate is expected to hold steady at 6.4% the corresponding Unemployment Change figure is forecast to post a decline of 4,000. As confidence in Germany’s economy is already softened this could spur the Euro onto a downtrend.
Current EUR, GBP Exchange Rates
At time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was on an uptrend around 0.7221, while the Pound Sterling to Euro (GBP/EUR) pairing was ceding ground in the range of 1.3848.