Pound Sterling to Euro (GBP/EUR) Exchange Rate Trending Higher
If investors were concerned that the European Central Bank’s latest interest rate announcement would be a bit of a non-event, they were pleasantly surprised.
Although the ECB left interest rates on hold, as expected by economists, a protestor attacked Mario Draghi during the press conference and the central bank chief indicated that it’s up to Greece to take action if the nation wants to stay part of the Eurozone.
The Pound gained on the common currency after the press conference concluded and held gains into Thursday.
The Pound Sterling to US Dollar (GBP/USD) exchange rate also gained following the release of a disappointing US Industrial Output report. The -0.6% decline in production was double the drop anticipated.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3931.
GBP/EUR Hits High of 1.3951, GBP/USD Softer Ahead of US Data
Before European Central Bank (ECB) President Mario Draghi delivered his policy statement, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending 0.5% up on the day’s opening levels.
Although the Eurozone’s trade surplus was shown to have tripled in size between January and February, the Euro failed to see much benefit as investors adopted a cautious stance ahead of Draghi’s comments.
The ECB left interest rates on hold, as expected by economists.
Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate held declines prior to the publication of the latest US Industrial and Manufacturing Production stats. Better-than-forecast figures may push Sterling lower, but a decline in output has the potential to drive ‘Cable’ upwards.
The Pound Sterling to Euro (GBP/EUR) exchange rate edged back below the 1.39 level on Tuesday after UK core inflation eased and Eurozone industrial production impressed, while the Pound Sterling to US Dollar (GBP/USD) exchange rate jumped in response to a below-forecast US Advance Retail Sales print.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: ECB’s Draghi Set to Speak, Volatility Forecast
At the beginning of the week the Pound Sterling to Euro (GBP/EUR) exchange rate briefly advanced above the 1.39 level as the situation in Greece continued to dampen demand for the Euro.
However, Sterling later lost ground against its European currency counterpart following the publication of encouraging industrial production data from the Eurozone.
The 1.1% month-on-month increase in output in February far exceeded the 0.4% gain forecast, and the annual figure of 1.6% was markedly stronger than the 0.8% projected.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.3897
The data indicated that the European Central Bank’s (ECB) quantitative easing programme, coupled with a softer domestic currency, is improving sentiment and economic conditions in the currency bloc.
According to FastFT; ‘The industrial data are the latest sign that the Eurozone economy is on the way up as the common currency bloc benefits from a €60 billion a month bond purchasing programme from the European Central Bank, which was kick-started in March.’
The decline in the GBP/EUR currency pair was exacerbated by a surprise dip in the UK’s core inflationary level.
Core CPI had been expected to print at 1.2%, but it actually softened to 1.0%.
However, the fact that non-core inflation held at 0.0% rather than slipping into deflation territory limited the Pound’s losses.
This morning’s final German inflation data for March had little impact on the Euro as it confirmed annual inflation of 0.3% and a monthly figure of 0.5%.
While today’s Eurozone trade balance figures could cause some Pound to Euro exchange rate movement, investors are more likely to focus on the upcoming European Central Bank (ECB) policy statement.
Although the central bank isn’t expected to make any moderations to fiscal policy, it may comment on the situation in Greece.
If President Mario Draghi intimates that the ongoing debt negotiations are likely to have a detrimental impact on the currency bloc, we could see the Euro soften in the hours ahead.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: GBP/USD Forecast to Fluctuate on US Manufacturing/Industrial Production Data
Yesterday’s UK core inflation report might have dented demand for the Pound slightly, but the Pound Sterling to US Dollar (GBP/USD) exchange rate still registered a sturdy gain during the North American session.
The US Dollar softened across the board as the US Advance Retail Sales report showed less of a rebound than expected by economists.
The 0.9% gain, while the best result for four months, was shy of the 1.1% figure expected and was seen to undermine expectations for a summer interest rate increase from the Federal Reserve.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a low of 1.4718
On Wednesday the Pound shed some of its initial advance ahead of the release of the US Industrial/Manufacturing Production figures.
Solid prints would give the US Dollar a boost and could push the Pound back below the 1.47 level.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: UK Employment Data, US Inflation Still to Come
Over the rest of the week further Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rate movement is likely to occur in response to the release of two highly influential sets of ecostats.
The UK’s jobs data, due for release on Friday, could give Sterling a boost if it shows a dip in the level of joblessness or a notable increase in average earnings.
Similarly, the US Consumer Price Index could trigger a wide-spread Dollar sell-off if inflation is shown to have decelerated rather than stagnating as forecast.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7196, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.4746, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6779, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3894