The Euro to Pound Sterling (EUR/GBP) exchange rate edged higher by around 0.3% during the early stages of Thursday’s European session.
With trader focus dominated by the forthcoming Federal Open Market Committee (FOMC) interest rate decision, market volatility is comparatively subdued this morning. This is because investor opinion is divided as to whether the Federal Reserve will opt to stick or twist on the cash rate. The shared currency edged higher versus many of its peers on Thursday morning because many traders speculate that the Fed will hold off from hiking the lending rate in the face of China’s economic woes. This would delay the widening of policy divergence between the Fed and the European Central Bank (ECB).
The Pound, meanwhile, ticked lower versus many of its currency rivals as traders await UK Retail Sales data. Retail Sales are expected to see slower growth in August as fuel prices continue to decline. The British asset is still holding a comparatively string position against the common currency after rallying yesterday in response to better-than-anticipated labour market data.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7298.
EUR/GBP Conversion Rate Predicted to Hold Losses after Eurozone Inflation Missed Estimates
The Euro to Pound Sterling (EUR/GBP) exchange rate dived by around -1.0% on Wednesday morning.
European economic data produced disappointing results on Wednesday. On the year, August’s Eurozone Consumer Price Index came in at 0.1% despite the median market forecast 0.2%. August’s Core Consumer Price Index also failed to meet with the market consensus of 1.0%, with the actual result falling to 0.9% on the year. This disappointing data further highlights the likelihood that the European Central Bank (ECB) will look to expand monetary stimulus in order to combat falling price pressures and single currency overvaluation.
ECB Vice President Vitor Constancio said that the central bank has room to buy more assets to expand quantitative easing. ‘The total amount that we have purchased represents 5.3% of the GDP (gross domestic product) of the Euro area, whereas what the Fed has done represents almost 25% of the US GDP, what the Bank of Japan has done represents 64% of the Japanese GDP and what the UK has done 21% of the UK’s GDP,’ Constancio told Reuters in an interview. ‘So we are very far from what the major central banks have done,’ Constancio, 71, added. ‘This is not a benchmark …(but) there is scope, if the necessity is there.’
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7276.
GBP/EUR Exchange Rate Predicted to Trend Higher after UK Wage Growth Hits 6-Year High Today
In contrast to its European counterpart, the Pound rallied versus its major peers on Wednesday after domestic data produced mostly positive results. Average Weekly Earnings was particularly positive having shown wage growth of 2.9% in July, eclipsing the median market projection of 2.5%. This is the fastest acceleration of wage growth in 6-years as low inflation sees household income spread further.
Chancellor of the Exchequer George Osborne was unusually dovish with regards to wage growth, however, stating; ‘Working people have received the fastest real-terms rise in over a decade. But we still face risks both from the global economy and from those at home who would undermine our economic security.’ This could be construed as a thinly veiled insult towards the new Labour leader Jeremy Corbyn, whose anti-austerity rhetoric is causing significant unease in the ruling Tory party.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7273 during Wednesday’s European session.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Losses ahead of ECB Economic Bulletin
With a complete absence of further economic data publications pertaining to either the UK or Europe, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold losses for the remainder of Wednesday’s European session. Thursday ought to see significant volatility, however, with several influential ecostats due for publication. For those invested in the Euro, the ECB Economic Bulletin may be of interest. British Retail Sales data has the potential to provoke changes for the EUR/GBP pairing. However, the Federal Reserve interest rate decision is likely to dominate trader focus on Thursday. The decision is likely to have a significant impact on currency market volatility.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7359 during Wednesday’s European session.