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Pound Sterling to Euro Exchange Rate Forecast: GBP/EUR at 1.37, GBP/USD at 1.57, UK Inflation & BoE Minutes In Focus

GBP/EUR exchange rate traded in the region of 1.38 on Friday, GBP/USD Climbed to 1.57 as US Data Disappoints

The Pound Sterling to Euro exchange rate softened slightly at the end of the week as concerns over Greece eased on news that the Greek government had successfully managed to pay public sector wages worth €500 million.

Sterling softened by -0.24% after the news broke, against other peers the currency continued to advance as it was supported by the release of stronger-than-forecast UK construction data.

The positive data showed that construction sector activity rebounded strongly in March to end a run of declines, which lasted four consecutive months. Total construction output was shown to have increased by 3.9% on a monthly basis and by 1.6% on an annual basis.

As the session progressed, the Pound gave up gains against the Euro, on the news out of Greece. The single currency was also continuing to be supported by activity in the bond markets.

The Pound to Euro (GBP/EUR) Exchange Rate Reached a High of 1.4028 in the week of May 11 to 15

Looking ahead to next week the currency pair is expected to continue to be volatile. Tuesday will see the publication of the latest UK inflation, producer price inflation and retail price index data and the Eurozone will publish inflation, balance of trade and economic sentiment reports.

British and Eurozone inflation is expected to be unchanged.  If the inflation data comes in different to expectations, the exchange rate will experience fluctuations.

Eurozone balance of trade data is expected to show that the region’s trade surplus narrowed from €20.3 billion to €15.7 billion. Eurozone economic sentiment meanwhile is forecast to improve from 64.8 to 65.6.

Sterling could soften midweek if the Bank of England (BoE) policy meeting minutes show that policy makers are becoming more dovish over the performance of the UK economy.

The bank cut its growth forecasts for the next three years so a dovish set of minutes is more likely than hawkish ones.

Other data releases that are likely to influence the GBP/EUR exchange rate include German and Eurozone PMI reports and UK retail sales data.

The Pound to US Dollar (GBP/USD) Exchange Rate Reached a High of 1.5805 in the week of May 11 to 15

The Pound could advance to a new six-month high against the US Dollar next week if US economic data continues to come in below expectations.

A run of weak data releases had raised concerns that the world’s largest economy is slowing down and has caused investors to speculate that the Federal Reserve may choose to delay hiking interest rates until 2016.

Tuesday’s UK inflation rate is expected to remain unchanged on Tuesday. A better than forecast figure would support the Pound.

The Euro will also be influenced by the release of manufacturing and services PMI data on Thursday.