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Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Rally after IMF Projects Robust UK Growth



The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.6% on Wednesday morning.

Despite the fact that the UK BRC Shop Price Index declined by -1.9% in September, the Pound strengthened versus most of its major peers on Wednesday morning. The appreciation can be linked to a report from the International Monetary Fund (IMF) that projected comparatively robust British growth despite a global economic slowdown. They suggested that the Bank of England (BoE) is approaching a position in which to begin advancing the benchmark interest rate. Later this morning, UK Industrial Production and Manufacturing Production data is likely to provoke Sterling volatility.

Meanwhile, the shared currency dived versus its major peers in response to disappointing domestic data. Annual German Industrial Production saw 2.3% growth in August which was well below the market consensus of 3.3%. On a monthly basis, German Industrial Production contracted by -1.2% in August. With an absence of further domestic data publications to provoke volatility, the single currency is likely to hold a weak position versus its most traded currency rivals.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3595.


GBP/EUR Conversion Rate Predicted to Trend Statically on Central Bank Uncertainty

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

With so much uncertainty regarding the timing of a Bank of England (BoE) interest rate hike, and with even more uncertainty connected to the EU referendum in 2017, traders have shown increased reluctance to invest heavily in the British asset. Tuesday has seen a continuation of this trend after domestic data produced mostly poor results. Halifax House Prices declined by -0.9% on the month in September. Although the headline figure for house prices was disappointing, Halifax analysts stated that underlying growth trends remained robust. In addition, September’s annual New Car Registrations saw slower growth compared with the previous figure.

‘Housing demand has been strengthening recently, underpinned by economic growth, rising real earnings and very low mortgage rates,’ said Halifax economist Martin Ellis. ‘There is little reason to expect any fundamental shift in the key market drivers over the coming months.’

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3535.

EUR/GBP Exchange Rate Forecast to Hold Steady ahead of US Trade Balance

After European economic data produced a decidedly mixed set of ecostats on Tuesday, the shared currency saw little by way of volatility. With traders still uncertain about the full extent of the impact from the recent Volkswagen scandal and with mounting speculation that the European Central Bank (ECB) will look to ease policy to combat deflation, the common currency has seen minimal volatility. A slight appreciation against some of its major peers can be related to EUR/USD negative correlation. With that in mind, it is possible we will see Euro volatility during the North American session upon the release of the US Trade Balance report.

As mentioned above, European economic data produced varied results on Tuesday. August’s annual German Factory Orders missed estimates of 5.6% growth, with the actual result only reaching 1.9%. However, the German Construction PMI saw robust output having climbed from 50.3 to 52.4. The German Retail PMI for September cooled from 54.7 to 54.0, but the Eurozone Retail PMI ticked higher from 51.4 to 51.9.

The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3492 during Tuesday’s European session.

Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Trend within a Tight Range ahead of BoE Announcement

Although there are a number of domestic and economic data publications over the coming days with the potential to provoke changes for the GBP/EUR exchange rate, there is a high likelihood that trade will remain subdued. This is partly due to trader uncertainties regarding several important economic events, not least the timing of the first Federal Reserve rate hike, but also as traders await the Bank of England’s latest policy announcement. On Thursday the Bank of England (BoE) interest rate decision and accompanying minutes will be closely watched by traders. In addition, the European Central Bank minutes from the most recent policy meeting are likely to provoke volatility. What is more, the Federal Reserve will publish minutes from the North American central bank’s most recent policy meeting. This could have a significant impact on both the Pound and the Euro.

The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.3569 during Tuesday’s London session.