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Pound Euro Exchange Rate Forecast to Flop if Construction Slows

The Pound may decline against the Euro if national construction falls today, while the Euro could rally on Eurozone GDP.

  • GBP EUR traded at 1.18 Tuesday – EUR GBP trading at 0.84
  • Pound boosted by manufacturing jump – Weak GBP aided competition
  • Euro losses seen on Eurozone jobs data – Unemployment static despite forecasts
  • Pound drop possible on construction stats – Euro could rally if GDP grows

Sterling rose by 0.3% against the Euro yesterday, having been pushed up by April’s manufacturing PMI.

The rise from 54.2 to 57.3 beat forecasts, as a fall was on the cards. This was largely caused by the weak Pound increasing UK competitiveness in overseas markets.

Eurozone news, meanwhile, remained in line with forecasts. The March Eurozone unemployment rate posted 9.5%, instead of falling to 9.4% as forecast. This left the Euro in a weak position for much of Tuesday’s trading.

Following yesterday’s manufacturing PMI, today’s main Pound influence will be April’s construction PMI.

Forecasts have been for a slight dip in construction activity, from 52.2 to 52. While a minor decline, this comes at a time when the UK’s housing crisis is a heated issue.

In the context of the UK general election, a falling construction PMI could weaken the Pound and become a hot topic among campaigning parties.

This will be followed by the services PMI on Thursday, which could cause the biggest weekly Pound Euro movement.

A slowdown is expected from 55 points to 54.5, which may panic investors and devalue Sterling. The services sector is the UK’s largest economic contributor, so reduced activity is rightfully cause for concern among traders.

Today and tomorrow will be busy for the Euro, which could be boosted by German jobs data and Eurozone GDP growth, among other releases.

Today’s German unemployment rate is forecast to stay at 5.8%, but the number of unemployed is still expected to drop.

Eurozone-wide Q1 GDP growth is forecast to rise on the quarter, but no annual increase from 1.7% is predicted.

Thursday’s major announcements will be finalised Eurozone services PMIs, followed by retail sales data.

Overall services activity is forecast to rise, while sales in March are predicted to rise annually but fall on the month.

Ending Thursday’s Eurozone news will be three European Central Bank (ECB) speeches, including closing remarks from ECB President Mario Draghi.

If German unemployment drops and Eurozone GDP growth exceeds forecasts, the Euro could rise today. Later on Thursday, a pair of positive sales stats are also likely to push up the EUR GBP exchange rate.

Recent Interbank GBP EUR Exchange Rates

At the time of writing, the Pound to Euro (GBP EUR) exchange rate was trading up at 1.18 and the Euro to Pound (EUR GBP) exchange rate was trading down at 0.84.