Sterling to Euro (GBP/EUR) Exchange Rate Holds Steady while Awaiting GDP Data
Ahead of today’s second quarter GDP release movement has been minimal in the GBP/EUR pairing, trending narrowly in the range of 1.4043 as investors await the imminent data. The result of the report will almost certainly have a major impact on the strength of the Pound (GBP) against its rivals, with the potential to push this particular exchange rate back towards its eight-year highs of last week.
The release of positive numbers from the German IFO Business Climate Index saw the Pound Sterling to Euro (GBP/EUR) exchange rate decline, hitting a low of 1.3985.
Euro (EUR) Suffered on Disappointing PMIs, GBP/EUR Exchange Rate Continued Dovish Trend as Pound Failed to Capitalise
Last week’s lower-than-expected PMIs for the Eurozone hit the common currency badly as they revealed negative performance from both Germany and the Eurozone as a whole. Still remaining above the baseline of 50, the figures nevertheless indicated a decreased margin of security as they dropped lower across the board. The composite for the Eurozone hit 53.7 rather than 54 and Germany came in at 53.4 instead of 53.9, dropping away from the previous report. This failed, however, to boost the GBP/EUR rate back to the highs it had achieved earlier in the week.
Positive mortgage approval rates from the UK, 44488 as opposed to the forecast 43300, released at the same time have equally failed to have a significant impact on the pairing. This increased lending certainly implies a higher level of confidence in the economy from UK banks but ultimately investors did not follow suit. Hitting a peak of 1.4165 early in the day the exchange rate soon slumped back to trend in the region of 1.4129 for the duration of the weekend.
Pessimism Pulling Pound Sterling (GBP) Conversion Rate Down, Euro (EUR) Soars Today on German Business Climate Index
Today saw the release of Germany’s IFO Business Climate, Current Conditions and Expectations Indexes. Overshadowing the poor performance of Germany’s Import Prices earlier this morning, the figures were universally positive. Projected to have fallen from 107.5 to 107.2, the business climate index instead rose to 108 and thus exceeded expectations. While this latest boost in the Euro’s fortunes in fact seemed to begin before these numbers hit the market, the IFO figures have sent its value even higher, pushing the GBP/EUR exchange rate down to a low of 1.3985.
The increasingly bleak state of the global commodity market, it is speculated, will possibly lead to a more dovish stance from the Bank of England’s (BoE) Monetary Policy Committee (MPC) at their next meeting. After the excitement over a potential split vote in the coming months, and an imminent interest rate rise, the latest trends seem to imply that this may be more likely to happen later rather than sooner. Consequently traders seem to be starting to question the wisdom of such an initially optimist outlook, and whether it might not be better to wait for the BoE to definitively move closer to the increase. Whatever the reason, faith in the Sterling is certainly appears to be slipping, pushing it downwards against most of its rivals today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: UK GDP Report Offers Hope for Sterling, Euro Likely to Remain Strong
Prospects for the Pound may, however, be a little brighter with the second quarter GDP results due out on Tuesday. Should economic growth be demonstrated it would be likely for the GBP/EUR pairing to go back on the up, although if the year-on-year instead falls short of the forecast 2.6% Sterling will almost inevitably soften further.
With various data also coming out of the Eurozone later on this week, including the Consumer Price Indexes and German Unemployment figures, the exchange rate is certainly set to see movement. As the Euro coasts high at present its future looks distinctly robust, remaining relatively unaffected by issues that dog many of its rivals as the threat of a Grexit continues to recede.
As of writing the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4024.