Pound Sterling (GBP) Trends Higher ahead of UK GDP Data Today
Ahead of today’s UK fourth quarter GDP report the Pound Sterling to Euro (GBP/EUR) exchange rate has been gaining ground, despite expectations for growth to have slowed at the end of 2015. The appeal of the Euro (EUR), meanwhile, has been dented by the revelation that German Import Prices had continued to contract in December. As a result the GBP/EUR pairing was trending around 1.3091 at the start of Thursday’s European session.
GBP/EUR Exchange Rate Slumps Further on Disappointing UK Home Loans Figure
The Pound Sterling to Euro (GBP/EUR) exchange rate has continued to slump after the BBA Loans for House Purchase also fell short of forecast, demonstrating a persistent weakening in the domestic housing market. Consequently, towards the end of Wednesday’s European session the GBP/EUR pairing was trending lower at 1.3123.
Steady German Consumer Confidence and slowing UK house prices have pushed the Pound Sterling to Euro (GBP/EUR) exchange rate onto a downtrend on Wednesday morning.
Euro (EUR) Diminished as PBoC Monetary Intervention Bolstered Market Risk Appetite
Demand for the Euro (EUR) was dented on Tuesday in spite of jittery traders putting an end to the recent stock market rally, with a 6.4% slump on the Shanghai Composite Index triggering a fresh rout. Investors were largely reassured after the People’s Bank of China (PBoC) injected 440 million Yuan (CNY) into the domestic market, a move designed to boost liquidity ahead of the Chinese New Year. This signalled that the central bank remains willing to intervene in order to support the Chinese economy, reducing the appeal of safe-haven currencies as an atmosphere of risk aversion predominated.
Weaker UK Housing Data Prompts Pound Sterling to Euro (GBP/EUR) Exchange Rate Downtrend Today
Although the Nationwide House Prices report for January revealed that the housing market had slowed somewhat, both on the year and on the month, this has seen the Pound (GBP) trend lower across the board this morning. Despite concerns of a housing market bubble the persistent lack of strong UK data has left traders with little inclination to buy into the softening currency, particularly as ‘Brexit’ concerns continue to weigh on sentiment.
The single currency, meanwhile, has been shored up after the German GfK Consumer Confidence Survey held steady on the month. Defying expectations of a slight dip in confidence this indicated that the Eurozone’s powerhouse economy remains in a more robust state, regardless of negative global headwinds and the dovish rhetoric of the European Central Bank (ECB).
GBP/EUR Exchange Rate Forecast: Pound Predicted to Soften as UK GDP Slows
Tonight’s Federal Open Market Committee (FOMC) policy decision is likely to spur fresh volatility for the common currency, with the Euro predicted to benefit if US policymakers take a less hawkish tone with regards to the pace of future interest rate hikes. If the policy divergence between the FOMC and ECB remains more minimal the GBP/EUR exchange rate is expected to weaken further.
The fourth quarter UK GDP report is forecast to show that growth in the domestic economy slowed somewhat from 2.1% to 1.9% on the year, a result which would further diminish the likelihood of the Bank of England (BoE) raising interest rates in the near-future. Consequently the GBP/EUR currency pair is likely trend lower ahead of the weekend.
Current GBP, EUR Exchange Rates
At the time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was slumped around 1.3156, while the Euro to Pound Sterling (EUR/GBP) pairing was making gains in the region of 0.7599.