Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Trend Statically after Obama Shows Support for UK to Stay in EU
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range on Monday afternoon.
Despite a complete absence of domestic data to provoke volatility, the British Pound advanced versus a number of its major peers. The appreciation can be linked to news that US President Barack Obama wants the UK to remain a member of the European Union.
Obama’s political heavyweight status could have a positive influence on the British vote amid concerns of reduced trade with the US if the UK votes to leave the EU.
Vocal supporter of a ‘Brexit’, Mayor of London Boris Johnson, openly criticised the US President, stating he was a hypocrite who would never allow his own country’s sovereignty to be compromised.
Johnson stated; ‘The whole concept of “pooling sovereignty” is a fraud and a cheat. We are not really sharing control with other EU governments: the problem is rather that all governments have lost control to the unelected federal machine. We don’t know who they are, or what language they speak, and we certainly don’t know what we can do to remove them at an election.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2888.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Steady as Traders Continue to Digest ECB Stimulus Measures
Last week’s dramatic changes to policy outlook from the European Central Bank (ECB) caused significant market volatility. The ECB cut all of its rates and expanded quantitative easing to €80 billion.
In the early stages of this week the Euro ticked lower versus most of its peers as traders continue to digest the aggressive measures. Although President Draghi stated that the ECB does not expect to cut rates again, the current level of stimulus measures should be enough to significantly devalue the Euro.
Domestic data produced positive results today but the massive expansion of asset purchases continues to outweigh domestic ecostats. January’s Eurozone Industrial Production was predicted to advance by 1.6% on the year and 1.7% on the month. The actual results, however, grew by 2.8% and 2.1% respectively.
Eurostat says the year-on-year increase is due to the production of consumer goods rising: ‘The increase of 2.8% in industrial production in the Euro area in January 2016, compared with January 2015, is due to production of non-durable consumer goods rising by 7.3%, capital goods by 4.6%, durable consumer goods by 3.2% and intermediate goods by 1.9%, while production of energy fell by 3.7%.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.2862 during Monday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Osbourne Budget Statement in Focus
One of the most significant British economic events this week will be Wednesday’s Budget Speech from Chancellor George Osbourne. Given the state of public finances, Osbourne is expected to make massive cuts to public spending. The Pound will likely tumble in response.
With an absence of any significant, market moving domestic data this week, Euro exchange rates will likely mostly be dictated by US Dollar positioning. The Federal Open Market Committee (FOMC) interest rate decision is likely to impact the Euro.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.2927 during Monday’s European session.