Newsflash – UK CPI sees GBP/EUR Trim Gains Before Eurozone Inflation
The Pound Sterling to Euro (GBP/EUR) exchange rate fell back below the 1.39 level on Tuesday as the UK’s non-core annual CPI printed at -0.1% rather than 0.0% as expected.
As a move into disinflation had been forecast by the Bank of England (BoE), the Pound’s losses were tempered.
With the Eurozone’s own inflation report and ZEW sentiment indexes ahead, further GBP/EUR movement is likely to occur.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading in the region of 1.3897
Newsflash: GBP/EUR Exchange Rate Gains Despite UK House Price Dip
Although the UK’s latest house price data showed a decline in prices on both the month and year in May, the Pound Sterling to Euro (GBP/EUR) exchange rate managed to record a modest 0.2% gain in the early hours of the European session.
Rightmove’s House Price report showed a monthly figure of -0.1% and an annual figure of 2.5% (down from 4.7% on the year in April).
Investors with an interest in the GBP/EUR pairing will also be looking ahead to Tuesday’s inflation numbers for both the UK and Eurozone. Unexpected results for either region would have a notable impact on demand for their respective currencies.
The ZEW economic sentiment reports for Germany and the Eurozone as a whole also tend to have an impact on demand for the Euro.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3754
The Pound Sterling to Euro (GBP/EUR) exchange rate fell from 1.40 to 1.37 last week, but the pairing could recover losses if Greece fails to reach an agreement with its creditors or minutes from the latest Bank of England (BoE) meeting show a split vote on the subject of interest rates.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News – UK Election Result Pushes Pound to 1.40, but BoE Growth Cuts Dampen Sterling Sentiment
As the Conservative party secured an unexpected outright victory in the UK general election, reduced political uncertainty drove the Pound higher across the board and the Pound Sterling to Euro (GBP/EUR) exchange rate rallied to 1.40.
The pairing also benefited from the UK’s impressive employment figures, although the news that Greece met its debt obligation to the International Monetary Fund (IMF) tempered gains somewhat.
The GBP/EUR exchange rate then swiftly shed its advance following the publication of an unexpectedly dovish inflation report from the BoE.
According to The Financial Times; ‘Following relatively weak 0.3% growth in the first quarter of 2015, the BoE on Wednesday reduced its central forecast for the full year to 2.6%, from its 2.9% estimate in February. It has also revised its prediction for expansion in 2016 and 2017, cutting it by a similar amount to average 2.5% — because of a more pessimistic outlook for growth in productivity (the amount of output per worker or hour worked) and labour supply.’
As well as lowering the UK’s growth forecasts, the central bank warned of the detrimental impact of a strong domestic currency.
The Eurozone, meanwhile, released positive growth figures for France and the currency bloc as a whole as well as upwardly revised inflation data for Germany.
GBP/EUR Exchange Rate Closes out Week Lower Even as Greece Stands Firm on its Bailout Negotiations
The Pound Sterling to Euro (GBP/EUR) exchange rate fell back to trending just on the 1.37 line on Friday even as Greece declared that it wouldn’t be compromising on red line issues like pensions or wage cuts, even if it meant delaying the securing of essential bailout funds.
Greek Prime Minister Alexis Tsipras stated; There’s no doubt that an agreement must be reached. But those who think that the Greek side’s resistance can be tested or that its red lines will fade as time passes, would do well to forget it.’
With some sources implying that Greece will run out of cash in less than two weeks, time is running out for the Hellenic nation. The more the odds of a Grexit rise, the more downward pressure will be applied to the Euro.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast – UK Inflation Data, ZEW Sentiment Surveys, BoE Minutes and Greek Negotiations in Focus
We can expect another spate of Pound Sterling to Euro (GBP/EUR) exchange rate movement this week as both the UK and Eurozone publish a number of influential ecostats.
Tuesday is particularly busy in terms of releases, and kicks off with the UK’s Consumer Price Index.
As economists are expecting a 0.4% month-on-month increase in consumer prices and stagnant annual inflation, a surprising result would have a notable impact on GBP/EUR trading. Higher inflation would boost the Pound while a negative annual reading would likely see Sterling fall against the Euro.
This report is followed by the Eurozone’s trade balance numbers and the ZEW Economic Sentiment Surveys for Germany and the Eurozone. The German Current Situation Index is believed to have fallen from 70.2 to 68.8 in May, while the Economic Sentiment measure is predicted to slide from 53.3 to 48.5 – results which would be Euro-negative.
The Eurozone’s own inflation data will also be of interest as consumer price gains would be further proof that the European Central Bank’s (ECB) quantitative easing measures are having the desired effect.
On Wednesday the big GBP/EUR exchange rate mover will be the publication of minutes from the last Bank of England policy meeting.
If any of the nine members of the Monetary Policy Committee (MPC) voted in favour of interest rates being raised immediately, a Sterling upswing could follow the minute’s publication.
Towards the close of the week investors will be focusing on Markit Services, Manufacturing and Composite PMI’s for the Eurozone and its major economies as well as the UK’s retail sales report.
On top of all these high-profile figures, the Greek negotiations will continue having an impact on trading.
On Sunday the Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7239, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5768, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6341, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3724