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GBP/EUR Exchange Rate Forecast to Trend Narrowly ahead of BoE Quarterly Statement

Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Steady despite ‘Brexit’ Uncertainty

The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range on Tuesday morning.

With uncertainty regarding the UK’s EU referendum, demand for the Pound eased considerably thus far this year. During the Easter break the UK asset recovered a little as traders took advantage of the Pound’s comparatively low trade weighting.

On Tuesday morning the UK asset was trending narrowly versus most of its major peers as investors await the last quarterly financial risk statement from the Bank of England (BoE) ahead of the June 23rd referendum vote. Most traders expect a dovish report given the risk that a ‘Brexit’ poses on financial stability. Many will be hoping that policymakers will outline some affective contingency plans in the event of a ‘Brexit’.

Speaking of the referendum, Mark carney recently stated that ‘The issue is the biggest domestic risk to financial stability because, in part, of the issues around uncertainty.’

Given the lack of market moving data today, the BoE’s statement is likely to provoke significant Sterling volatility.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2749.

Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Trend Statically Despite Better-than-Expected Eurozone Loan Growth

With mounting concerns that the European Central Bank’s (ECB) expansive stimulus measures will still not be enough to force an inflationary recovery in the Eurozone, the single currency is holding a weak position versus most of its peers. The recent drop in commodity prices, led by crude oil, has exaggerated concerns regarding long-term low inflationary pressure.

Despite this, domestic data printed comparatively positively on Tuesday which softened the Euro’s depreciation. On the year, February’s Loan Growth came in at 1.6%; bettering the median market forecast 1.5% growth.

Howard Archer at IHS said: ‘The ECB will be hoping that February’s increase in bank lending to businesses and households provides a decent platform on which the stimulative measures that it announced at its 10 March meeting can build on. The ECB will certainly be looking for March’s pretty substantial package of extra measures to increasingly kick in over the coming weeks and months to support bank lending to the private sector across the Eurozone.’

The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.2692 during Tuesday’s European session.

GBP/EUR Exchange Rate Forecast: US Consumer Confidence Data to Provoke Volatility

Given that both the Pound Sterling and Euro are sensitive to US Dollar movement, today’s US Consumer Confidence data should provoke GBP/EUR exchange rate volatility. A speech from Federal Reserve Chairwoman Janet Yellen may also cause GBP/EUR changes.

With a complete absence of UK data on Wednesday, the Pound Sterling to Euro exchange rate is likely to see volatility in response to German consumer prices data. If consumer prices in the currency bloc’s most influential nation fail to show any sign of improvement, the single currency is likely to dive versus its major peers.

The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.2754 during Tuesday’s European session.