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Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: VW Emissions Scandal Panics Eurozone Investors, ECB’s Praet Implies Further QE


The Euro to Pound Sterling (EUR/GBP) exchange rate has fallen today; the common currency has fared extremely poorly elsewhere as well. This is mainly due to the potential ramifications of Volkswagen’s falsification of emissions data on the German economy and the possibility for further quantitative easing from the European Central Bank (ECB).

EUR/GBP Exchange Rate News: Day of Defeat for Euro as Germany Faces a Crippling Blow

The Euro (EUR) has fallen by -0.4% against the Pound Sterling (EUR/GBP) today and elsewhere, the common currency has declined across the board, seeing losses of -0.4% against the New Zealand Dollar (EUR/NZD) and -0.5% against the Australian Dollar (EUR/AUD), the Canadian Dollar (EUR/CAD) and the US Dollar (EUR/USD). The greatest fall for the single currency has been by -1.2% against the South African Rand (EUR/ZAR).

The Euro has been hit most heavily today by the estimations of several influential economists, such as ING’s Chief Economist Carsten Brzeski, that the ongoing legal implications and expanding impacts of the VW emissions scandal have become ‘a bigger downside risk for the German economy than the Greek debt crisis’. As the biggest economic member of the Eurozone, Germany is extremely reliant on its automobile manufacturing industry, therefore the possibility of VW going under has weighed heavily on speculators’ minds during the week.

The Euro has also been harmed by implications from ECB Chief Economist Peter Praet yesterday that the ECB is not only capable of applying further quantitative easing, but may actually be planning to do so imminently.

Pound Sterling’s Performance remains Mixed as BoE Officials offer Conflicting Statements

The Pound Sterling (GBP) has fared significantly better than the Euro (EUR) today, rising against the common currency (GBP/EUR) by 0.4% and posting gains of over 0.4% against the Danish Krone (GBP/DKK), the Swiss Franc (GBP/CHF) and the Romanian Leu (GBP/RON). Against other rivals, however, the Pound has fallen considerably, seeing drops of -0.6% against the Turkish Lira (GBP/TRY), -0.8% against the South African Rand (GBP/ZAR) and -1.4% against the Russian Ruble (GBP/RUB).

Apart from Tuesday’s widening UK debt results, the biggest impactors on the Pound recently have been statements from Bank of England (BoE) officials. Last week, Chief Economist and Executive Director Andy Haldane made the case for the next BoE interest rate decision being negative, although this was counteracted on Monday by Deputy Governor Sir Jon Cunliffe arguing that a rise was actually in order. With today’s statement from Deputy Governor Ben Broadbent being decidedly dovish, it seems that speculators are undecided on just who to believe ahead of next month’s UK interest rate decision.

EUR/GBP Exchange Rate Forecast: Possible Pairing Stabilisation due before Close of European Trading Session

No notable economic releases are due from the UK or the Eurozone for the rest of the day, therefore it seems likely that the current GBP/EUR trending range will remain relatively unchanged into the weekend. Next Monday, the Euro will get a head start on results with the German Retail Sales figures for August coming out.

Current EUR, GBP Exchange Rates

The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7313 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3676 today.