Although the day’s Spanish inflation data proved mixed the Pound Sterling to Euro (GBP/EUR) exchange rate has remained on a downtrend following a stronger-than-expected increase in Nationwide House Prices.
Severe UK Flooding and Pound Overvaluation Concerns Weighed on GBP/EUR Currency Pair
In spite of unimpressive Spanish Retail Sales and Italian Consumer Confidence figures, suggesting that the consumer sentiment within two of the Eurozone’s major economies has weakened, the Euro (EUR) initially remained on a generally stronger footing yesterday. The Pound (GBP), meanwhile, was weighed down by Danske Bank’s comment that it was the world’s most overvalued currency, dampening trader demand. While the severe flooding in parts of the UK is expected to knock 0.25% off the nation’s GDP in the coming months, however, this was ultimately not enough to prevent the GBP/EUR exchange rate from rallying during the afternoon.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Bearish as Rising Nationwide House Prices Prompt Bubble Fears
Nationwide House Prices were found to have risen further than forecast in December this morning, by 4.5% rather than 3.8%, offering little reassurance to investors concerned by the increasing bubble present in the UK property market. With the Bank of England (BoE) considered unlikely to intervene within the housing sector in the near future this more bullish showing prompted the Pound to trend lower against the majority of rivals on Wednesday.
Proving determinedly buoyant, the single currency was only temporarily dented today by the release of a more mixed set of Spanish inflation data. Although inflationary pressure increased on the year in December, clocking in at 0% rather than -0.3%, the monthly figure saw a sharp slump from 0.4% to -0.3%. Despite Spain’s economic outlook seeming more muted, particularly in the wake of the recent inconclusive parliamentary election, the GBP/EUR pairing has nevertheless continued to retreat.
GBP/EUR Exchange Rate Forecast: Safe-Haven Demand Could Bolster Euro Further Today
Movement on the Pound Sterling to Euro exchange rate is likely to be more muted ahead of the weekend, with no further data due for release from either the UK or Eurozone before the end of the year. However, should this afternoon’s US crude oil inventories reading show a more limited decline in stockpiles than forecast the common currency could be bolstered on the back of increased safe-haven demand.
Current GBP, EUR Exchange Rates
At time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was slumped in the range of 1.3541, while the Euro to Pound Sterling (EUR/GBP) pairing trended higher around 0.7385.