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GBP/EUR Conversion Rate Forecast to Trend Higher on VW Scandal, GBP/USD Holding Steady after US Data Meets Estimates

Pound Sterling to Euro (GBP/EUR) Conversion Rate Predicted to Strengthen despite Absence of Data

The Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.2% on Monday afternoon.

With a complete absence of domestic data to provoke volatility, the British asset advanced versus many of its major peers. This is despite a dovish report from the Centre for Economics and Business Research (CEBR) which suggested that the global economic slowdown would cause the Bank of England (BoE) to delay a benchmark rate hike into mid 2016. The Pound’s appreciation can be linked to a report from economic forecasters Ernst and Young which contradicted recent comments made by the International Monetary Fund (IMF). The IMF stated that secular stagnation, as a result of a lack of business investment and government investment from nations around the world, would cause a global economic slowdown. However, Ernst and Young stated that secular stagnation would not have a detrimental impact on the UK given that this year British business investment reached 11% growth; the fastest investment acceleration since the year 2000.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3570.

Meanwhile, the shared currency softened versus the majority of its most traded currency competitors as the Volkswagen scandal continues to hinder investor confidence. With Germany so reliant upon its automotive industry, fears that more car companies have used similar tactics to cheat emissions laws could have a hugely devastating effect. The common currency is reliant upon Germany as the driving force behind Eurozone growth, so traders are understandably showing increased caution. In addition to the VW scandal, the Euro saw dampened demand after it emerged that pro-independence political parties in Catalonia won the majority of the vote. This could have far-reaching ramifications, not just for Spain, but for confidence in the notion that the Eurozone is centred on togetherness.

The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3546 to 1.3631 during Monday’s European session.

British Pound to US Dollar (GBP/USD) Exchange Rate Forecast to Trend Statically after US Data Met with Projections

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

Martin Beck, senior economic advisor to the Item Club, stated; ‘Contrary to the fears of some economists that the global economy is heading towards secular stagnation, we are confident that the UK will avoid this threat. UK business investment has performed impressively in recent years. And there are strong reasons to be optimistic about prospects for investment over the next few years. A continued appetite among firms to invest will be good news for productivity growth, and will ensure that the expansion of the UK’s economy is sustainable. Secular stagnation is an affliction that the UK should happily avoid.’

The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5187.

In the main, US economic data met with estimates on Monday which allowed the ‘Greenback’ (USD) to advance versus many of its major peers. Of particular positivity was August’s Core Personal Consumption Expenditure which advanced by 1.3% on the year. However, US Dollar gains were somewhat slowed thanks to August’s Pending Home Sales which advanced by 6.7% on the year; missing the median marker projection of 8.1% sales growth. With Federal Reserve officials due to make speeches later during the North American session, US Dollar volatility is likely.

The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5155 to 1.5242.