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GBP/EUR Conversion Rate Cools on Positive European Data, GBP/USD Steady on Poor US Manufacturing PMI

Pound Sterling to Euro (GBP/EUR) Exchange Rate Predicted to Trend Lower on Positive German and Eurozone PMIs

The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.1% on Monday afternoon.

With a complete absence of domestic data to provoke volatility today, the Pound Sterling has seen a mixed performance versus its peers. Sterling is holding gains over commodity-correlated assets after Asian cues caused commodities to slump. In general, however, the Pound has adopted a weak position since last Friday’s Public Sector Net Borrowing data produced particularly disappointing results. Public sector finances saw the worst deficit for any October since 2009. This provoked fears that Chancellor George Osborne will be forced to introduce harsher austerity measures in order to meet targets.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4255.

European economic data produced mostly positive results today. German and Eurozone Manufacturing, Services and Composite PMIs all bettered the respective median market forecasts. However, French Composite and Service PMIs failed to meet with expected growth. The common currency continues to hold a weak position versus its rivals after last week saw several dovish speeches from European Central Bank (ECB) officials including President Mario Draghi. Draghi reiterated previous assertions that the Frankfurt-based central bank will do whatever it takes to bring inflation back to target.

Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Trend Narrowly despite Improved December Fed Bets

The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a limited range on Monday afternoon.

In response to the weak UK public sector finances, Chancellor George Osborne stated that the target was still in place. However, in recent interviews Osborne has failed to commit to the original £10 billion surplus projected, stating ‘the precise level of the surplus will be set out in the forecasts on Wednesday. I’m pretty confident we can deliver what we promised at the general election, which is savings in welfare, savings in government departments – but for a purpose, which is the economic security that enables jobs to be created and living standards to rise.’

The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5182.

Although the US Manufacturing PMI declined beyond expectations the US Dollar is holding a position of strength against its currency peers. This is due, in the main, to recent hawkish comments from Federal Reserve officials. The Fed’s William Dudley recently asserted that it would be appropriate for the Fed to hike the cash rate in December with domestic economic conditions able to accommodate tighter policy. Bar any significant shocks, most economists agree that the Fed will lift-off in December, although the severity of the increments remains unknown. The Fed will likely want to make the first hike a symbolic increase rather than something that will have a huge impact on the domestic economy and the wider currency market.

Pound Sterling Forecast: Third-Quarter UK GDP to Provoke Volatility

The British economic data docket is particularly sparse this week. However, Friday’s preliminary result from third-quarter Gross Domestic Product will likely have a significant impact on Sterling movement. Tuesday’s German GDP will be likely to cause changes for the Pound Sterling to Euro (GBP/EUR) conversion rate.

There will be a number of influential US economic publications this week with the potential to cause marked GBP/USD exchange rate changes. Third-quarter US GDP, Core Personal Consumption Expenditure, Consumer Confidence and Durable Goods Orders will perhaps be the most influential US ecostats this week.

The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.4213 to 1.4301.

The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5121 to 1.5190 during Monday’s European session.