GBP/EUR Down 0.2% Despite Construction Sector Growth
As the talks between Greece and its creditors were stepped up a gear, the Euro advanced on the Pound.
The Pound Sterling to Euro (GBP/EUR) exchange rate fell back to trending in the region of 1.38 and held declines even as the UK’s Construction PMI beat forecasts.
The gauge of the construction sector rallied to 55.9 in May, up from 54.2 in April and beating projections for a reading of 55.0.
Although the GBP/EUR exchange rate failed to see much benefit from the figure, the pairing could climb in the hours ahead if the Eurozone’s inflation data disappoints.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3882
UK Manufacturing PMI Disappoints, German Inflation Rises
As the UK’s Manufacturing report actually disappointed expectations, showing a reading of 52.0 in May, the Pound Sterling to Euro (GBP/EUR) exchange rate moved away from the 1.40 level ahead of the release of Germany’s Consumer Price Index.
The CPI data showed the increase in consumer price gains expected by economists.
The Eurozone is set to release inflation numbers tomorrow and that data could drive GBP/EUR fluctuations.
The GBP/EUR pairing was trending in the region of 1.3934
Newsflash: GBP/EUR Close to 1.40 before UK Manufacturing PMI
Ahead of the release of the UK’s Markit Manufacturing PMI, the Pound Sterling to Euro (GBP/EUR) exchange rate advanced to a high of 1.3991
The fact that Greece made no progress in its bailout negotiations over the weekend kept the Euro under pressure, and if this morning’s manufacturing figure impresses the Pound could climb.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3981
Last week the Pound Sterling to Euro (GBP/EUR) exchange rate weakened to 1.3904, but we could see the pairing advance back above 1.40 if Greece fails to pay the International Monetary Fund (IMF) on June 5th.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: UK Growth and Confidence Data Drives Sterling Lower
The Pound fell from a 2 ½ month high against the Euro last week as investors responded to the UK’s disappointing growth and confidence numbers.
It had been hoped that UK first quarter GDP would be positively revised to 0.4% on a quarter-on-quarter basis, but it actually held at the initial estimate of 0.3%.
The annual growth number remained at 2.4% instead of being increased to 2.5% as projected.
After the growth data was published economist Howard Archer noted; ‘GDP growth in the first quarter was disappointingly and slightly unexpectedly unrevised at 0.3% quarter-on-quarter, which was the weakest growth since the fourth quarter of 2013. We expect the Bank of England to start edging up interest rates in the first half of 2016 and believe it is currently borderline whether the bank first moves in the first or second quarter.’
Additionally, the UK’s GfK Consumer Confidence Index had been expected to hold at 4 in May, but it actually printed at 1.
As some of the survey figures had been compiled after the UK general election, the report implied that there are those who lack confidence in the majority Conservative government.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast – Greek Default Could push Euro Lower, Pound May Benefit from Hawkish BoE Inflation Report
Conflicting statements from various European Union officials left investors confused over the likelihood of Greece defaulting on its upcoming debt repayment to the IMF.
Although the Greek PM assured markets that a deal was close to being struck, other well-placed figures stressed that there is still a great deal of work to be done before Greece can unlock essential bailout funds.
Before the weekend Greece implied that it still has time in hand to strike a deal.
As stated by Bloomberg; ‘The Greek government said it can survive another week without defaulting on the International Monetary Fund as European officials warned the window for accessing aid is closing. Greece will be able to scrape together enough cash to make a payment of about 300 million euros ($329 million) due to the IMF on June 5, Economy Minister George Stathakis said in an interview with Real News newspaper published Friday.’
If Greece does default, increasing the odds of the nation exiting the Eurozone, the Euro is likely to decline against all of its major rivals.
The Euro to Pound Sterling (EUR/GBP) exchange rate is also likely to fall if the Bank of England’s latest inflation report reasserts that consumer price pressures will grow as the year progresses or hints that interest rates could be raised before the end of the year.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Eurozone Inflation, Retail Sales and Employment Data Due, ECB Interest Rate Decision Ahead
Significant Pound Sterling to Euro (GBP/EUR) exchange rate news could occur next week as the Eurozone publishes a number of influential ecostats.
Monday sees the release of final Markit Manufacturing PMI for the Eurozone and its largest economies and on Tuesday the region’s Consumer Price Index is scheduled for publication.
Acceleration in consumer price gains would be Euro supportive but a decline in inflation would pile pressure on the common currency.
The Eurozone’s final Services PMI for May is due out on Wednesday, as is the Eurozone’s retail sales report. A sign that consumer spending picked up at the beginning of the second quarter could help the Euro advance on the Pound.
Unemployment data for the Eurozone will also be published on Wednesday and economists have forecast that the rate of joblessness in the currency bloc eased from 11.3% to 11.2% in April.
Further GBP/EUR exchange rate movement is likely to occur as a result of the European Central Bank’s (ECB) interest rate decision and accompanying press conference.
Hawkish comments from the central bank would be Euro-supportive.
The week closes with another high-profile report – the Eurozone’s second estimate first quarter growth data. Industry experts are anticipating a positive revision to the quarterly figure, from 0.3% to 0.4%. If that proves to be the case it would mean that the pace of output in the currency bloc exceeded that of the UK in the first three months of the year, an outcome which could drive GBP/EUR lower.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7188 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3910