Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Tick Lower Even After Carney Gives Balanced Argument Regarding EU Membership
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.4% on Tuesday afternoon.
As Bank of England (BoE) Governor Mark Carney answers MPs questions on the EU referendum the British Pound is enduring a mixed-faring versus its major peers. A slight lean towards depreciation can be linked to disappointing domestic data that showed February’s BRC Like-for-Like Sales hit just 0.1% growth.
Carney has presented a balanced argument, suggesting that the UK stands to benefit and lose from either outcome of the EU referendum vote. He stated that staying in the EU carries risk. The greatest risk, according to Carney, is the completion of monetary union and its impact on the UK. However, he also stated that he would expect some of London’s businesses to relocate in the event of a ‘Brexit’.
With so much uncertainty regarding the outcome of the EU referendum and the impact either scenario will have, the British Pound is expected to be highly reactionary to any political developments.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2894.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Strengthen after German Industrial Production Eclipsed Expectations
Despite the fact that most analysts predict that the European Central Bank (ECB) will look to ease monetary policy this week, the single currency climbed versus a number of its major peers today. This is partly the result of traders showing reluctance to predict how the ECB will approach policy given that policy easing in December was dramatically overestimated.
Today’s domestic data produced positive results. January’s German Industrial Production bettered estimates on both an annual and monthly basis. Additionally, the second estimate for fourth-quarter Eurozone Gross Domestic Product advanced beyond expectations on the year.
‘The January industrial production data imply upside risks to German and Eurozone GDP growth’ in the first quarter, London-based BNP Paribas economist Dominic Bryant said in a note to clients.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.2890 during Tuesday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Political Uncertainty and ECB Decision to Provoke Volatility
Given the high likelihood of some form of policy easing from the ECB on Thursday, but with traders reluctant to predict the extent of the central bank’s easing bias, there is every chance that the Euro will be subject to significant volatility in response to the outcome.
Political uncertainty is likely to continue to drive Pound Sterling exchange rate movement this week. With that said, however, there is the chance of Sterling volatility in response to Wednesday’s domestic ecostats which include Manufacturing Production, Industrial Production and the NIESR Gross Domestic Product Estimate for February.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.2952 during Tuesday’s European session.