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Pair of Historic Confidence Scores Trigger Euro to Pound Advance

On a day of news about confidence scores, the Euro has come out as the clear winner by making steady gains against the Pound.

  • EUR GBP rate up to 0.8959 – GBP EUR trades down at 1.1171
  • Euro supported by decade-high in confidence – German inflation rises above forecasts
  • Pound drops on confidence score – UK consumer sentiment back to 2016 levels
  • Will Euro expand gains on Eurozone unemployment? – UK economists focused on BoE rate decision next week

Trading at a rate of 0.8959 today, the Euro has been at its best rate against the Pound since July 25th.

EUR GBP Exchange Rate Rises on Confidence Stats

In an opposite situation to the Pound, the Euro has ticked up today thanks to highly supportive confidence figures for the overall Eurozone.

The key measure has been economic confidence in July, which has risen to the highest level in a decade.

Another Euro-booster has been German inflation for July, which has risen by more than expected both monthly and annually.

Pound Tumbles as UK Confidence Falls to Post-Referendum Levels

The Pound’s recent dip against the Euro comes from a GfK consumer confidence measure.

Covering May, the result showed that UK confidence levels have fallen to the level recorded after the EU Referendum in 2016.

This represents a circular movement for confidence in the UK, with all of the past 12 month’s progress being erased by the news.

Giving a gloomy outlook on future measures was GfK Head of Market Dynamics Joe Staton;

‘All bets must now be on a further drift downwards in confidence’.

Euro Volatility likely if Unemployment Rises

The main Eurozone event on Monday will be an unemployment measure for the overall currency bloc.

In June, the jobless rate is tipped to fall from 9.3% to 9.2%. While minor, such a reduction could raise hopes of European Central Bank (ECB) policy tightening in the coming months.

Euro traders are also gearing up for Tuesday’s high-impact announcements, which will cover Eurozone GDP growth and German unemployment. Annual GDP is predicted to rise to 2%, while German joblessness is expected to stagnate at 5.7%.

In a perfect storm scenario, the Euro could tick higher against the Pound on rising GDP and lower Eurozone and German unemployment.

The headline Pound-shifting event next week will be Thursday’s Bank of England (BoE) interest rate decision. The BoE is predicted to leave interest rates at 0.25%, with only three of eight policymakers expected to support higher rates.

If the unexpected happens and a four-four divide occurs, the Pound could rise sharply against the Euro on trader optimism.

This outcome still might not bring the coveted interest rate hike, but would be a strong indicator that a rate hike to 0.50% may be possible in 2017.

Current Interbank EUR GBP Exchange Rates

At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.8959 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.1171.