Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Decline ahead of German Inflation Data
The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.5% on Friday afternoon.
Despite the fact that British economic data produced positive results on Friday, the Pound softened versus the majority of its most traded currency rivals. The depreciation can be linked to fears that China’s economic struggles will weigh on the Monetary Policy Committee (MPC) and see the Bank of England (BoE) benchmark interest rate delayed into the second-half of 2016.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3646.
Meanwhile, the shared currency rallied versus many of its currency peers thanks to its new found status as a safe-haven asset. This is due to the inverse relationship with the US Dollar and amid speculation of lengthy delays to Federal Reserve and Bank of England (BoE) interest rate hikes. Additional support for the Euro as a safe-haven asset can be found in the differences between the European Central Bank (ECB) and the Swiss National Bank (SNB). With the SNB on negative interest rates and with a complete lack of government bonds to expand quantitative easing, the ECB is in a stronger position to intervene should it prove necessary.
German inflation data, due for publication later on Friday afternoon, has the potential to provoke changes for the common currency. Given that several ECB officials have warned that looser monetary policy may be necessary if the inflation outlook continues to disappoint, so inflation data from the currency bloc’s most influential nation will be particularly significant.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3594 to 1.3720 during Friday’s European session.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold below 1.54 ahead of US Data
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.2% on Friday afternoon.
The fact that UK data printed positively but the Pound was little affected will be seen as positive by Bank of England (BoE) officials who have voiced concerns regarding Sterling overvaluation. The second estimates for Q2 British Gross Domestic Product met with median market projections on both an annual and quarterly basis. In addition, the GfK Consumer Confidence Survey for August bettered estimates of holding at 4, with the actual result reaching 7.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5384.
Over the past few days US economic data has printed positively. Better-than-expected growth in the second-quarter and higher-than-anticipated Durable Goods Orders saw the US Dollar rally versus its major peers. Friday’s European session has seen the ‘Greenback’ (USD) halt gains, however, as traders continue to fear the fallout from China’s economic slowdown. Very few economists now believe a September rate hike is still on the cards and some don’t think the Fed will hike rates until 2016.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5361 to 1.5443 during Friday’s European session.