The Pound Sterling to Euro (GBP/EUR) exchange rate advanced in the early hours of Tuesday’s trading ahead of UK Industrial Production and Manufacturing Production figures.
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate kept up its bearish nature toward the end of Monday’s European trading as Greek negotiations continued.
Investor sentiment in the Euro rose as investors expected Greece to remain within the Eurozone.
Canadian finance minister Joe Oliver stated: ‘There has to be compromise. It’s clear that Greece has got to be prepared to make some changes, and I think a wholesale repudiation of their debt is not on the cards. But other countries, creditors will have to work with Greece to arrive at a compromise solution.’
The Euro to Pound Sterling (EUR/GBP) exchange rate fell rather dramatically in Monday’s session as talks between Greece and the troika escalated.
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate softened early in Monday’s European session after the German Trade Balance recorded growth rather than contraction.
The trade surplus rose from 17.9B to 21.8B in December–a record number for 2014.
Bundesbank commented: ‘Germany will have a positive current-account balance for the foreseeable future. Nevertheless, the size of the surplus should fall in the medium term.’
The Pound Sterling to Euro (GBP/EUR) exchange rate recorded significant gains in Friday’s trading which could be set to continue in the week ahead with several noteworthy pieces of data due to make an appearance.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
Sunday will begin with the UK Halifax Price Index, which is expected to stagnate in January after December’s 0.9% growth. As a result, the 3-monthly ecostat is forecast to decline from 7.8% to 7.7%.
Monday will get interesting for Euro to Pound Sterling (EUR/GBP) exchange rate trading when German Trade Balance and Eurozone Investor Confidence figures emerge. Any favourable figures could help prop up the Single Currency.
Eurozone domestic data will be thin on the ground on Tuesday, lending a lot of power in the GBP/EUR exchange rate to UK figures. BRC Like-For-Like Sales start Tuesday’s UK data stream with Industrial and Manufacturing Production following later in the session. Both production reports could be moderately influential for the Pound Sterling to Euro (GBP/EUR) exchange rate.
In addition, the NIESR Gross Domestic Product (GDP) Estimate for January will be out and could cause rather major Pound movement.
Bank of England (BoE) Inflation Report Forecast to Cause Significant Pound Sterling Movement
However, the most influential event for Sterling next week is likely to come in the form of the Bank of England (BoE) Inflation Report. The central bank has become fairly dovish in recent months as the price of fuel tumbled, dragging inflation along with it.
The January meeting minutes signalled the first time in five months that the Monetary Policy Committee (MPC) voted unanimously. In the past four summits, hawkish policymakers Ian McCafferty and Martin Weale voted for an immediate increase in borrowing costs.
As some economists suggest rate hikes won’t materialise until 2016, others believe the BoE could be one of the only major central banks to feasibly up borrowing costs this year.
Berenberg economist Rob Wood stated: ‘The amount of stimulus now in the pipeline means that rate-setters cannot say they have no plans to ever raise rates again. In our view, the market has gone too far in pushing back the timing of rate hikes.’
The BoE inflation report will be out on Thursday, along with the final German Consumer Price Index and Eurozone Industrial Production stats.
Friday could evolve into a major day for the Euro to Pound Sterling (EUR/GBP) exchange rate when German Gross Domestic Product (GDP) figures emerge. The third quarter of 2014 recorded 1.2% growth on the year and any increase in Q4 could boost the Euro significantly.
The German ecostats will be used as an indication for Eurozone GDP later in the day.
In addition, the coming week could see the Euro exchange rate placed under pressure as a result of ongoing Greek negotiations with the troika.
Any remarks from either European Central Bank (ECB) or the Bank of England (BoE) could impact the Pound Sterling to Euro (GBP/EUR) exchange rate notably.
On Friday, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3460 with market movement of +0.80%. The Euro to Pound Sterling (EUR/GBP) exchange rate was trading between the boundaries of 0.7419 and 0.7488.