The Pound Sterling to Euro (GBP/EUR) exchange rate has risen by 0.5% today, a stark reversal on the earlier downtrend exhibited by the Pound (GBP).
Lack of UK Data may see Recurrence of Poor GBP Performance Tomorrow
The Pound Sterling’s (GBP) rise against the Euro (EUR) today has primarily been due to a speech from European Central Bank (ECB) President Mario Draghi following the ECB’s decision to leave the European interest rate at 0.05%. Among other comments, Drahghi appeared to imply that quantitative easing could extend beyond September 2016, although Draghi later insisted that no such thing had been mentioned. Speculation clearly saw otherwise as the Euro plummeted against competitors following the statement.
Despite this reversal of fortunes for Sterling today, the current uptrend may not last after the knee-jerk reactions to Draghi’s statements subside. A number of major Eurozone and German economic releases are due tomorrow morning, while the UK will only be represented by the annual New Car Registrations figure for August, which has been classed as low-impact.
The Pound Sterling (GBP) has remained down by -0.3% against the Euro (GBP/EUR) today, although this result is slightly better than the earlier -0.5% loss seen by Sterling. The slight improvement has been caused by the Eurozone monthly Retail Sales figure for July posting a 0.4% rise, whereas a 0.5% increase had been expected.
ECB Dovishness may Restore GBP/EUR to Form
The Pound (GBP) may be losing out against the Euro (GBP/EUR) currently, but the announcement by the European Central Bank (ECB) later on may unsettle the pairing. No change is expected from the current European interest rate of 0.05%, but any particularly pessimistic statements by ECB policymakers will likely lower confidence in the single currency (EUR) considerably.
The Pound Sterling to Euro (GBP/EUR) exchange rate has dropped today after the day’s only UK economic announcements failed to excite speculators.
GBP/EUR Exchange Rate News: UK Services PMI Slower-than-Forecast
The Pound Sterling (GBP) has fallen by -0.5% against the Euro (GBP/EUR) today, just one of a number of significant losses for Sterling. Other declines include falls of over -0.5% against the Swiss Franc (GBP/CHF), the Danish Krone (GBP/DKK), the Japanese Yen (GBP/JPY) and the Russian Ruble (GBP/RUB). The Pound’s worst loss so far has been a -1% decline against the Swedish Krona (GBP/SEK). One of the few rises for the Pound today has been a 0.4% advance against the Turkish Lira (GBP/TRY).
This uninspiring performance has been partly caused by the UK Services PMI for August seeing a loss of -1.8 points down to 55.6; forecasts had been for a rise from 57.4 to 57.7.
Eurozone Markit PMIs Show Overall Growth in Services Sectors, EUR/GBP Rises as a Result
After receiving little by way of good news yesterday, the Euro (EUR) benefitted today from strong records of growth in the Services and Composite PMI scores in August for many Eurozone nations. In fact, barring a drop in the French scores, the German, Italian and overall Eurozone scores increased.
The common currency has had a far more decisive movement today compared to yesterday, rising against all competitors except the Japanese Yen (EUR/JPY). The Euro has risen by 0.5% against the Australian Dollar (EUR/AUD), the Pound Sterling (EUR/GBP) and the New Zealand Dollar (EUR/NZD) today and has seen a greater 0.6% advantage against the South African Rand (EUR/ZAR).
GBP/EUR Exchange Rate Forecast: Eurozone Retail Sales and ECB Decision will decide Dominant Currency Today
The Pound Sterling (GBP) has no further relevant data releases affecting it today, so its performance against the Euro (GBP/EUR) will be determined by Euro-centric announcements.
The first is the annual Eurozone Retail Sales figure for July; forecasts have optimistically estimated a 2% rise. The bigger news, however, will be the European Central Bank’s (ECB) decision on the European interest rate. Although no change is expected from the current 0.05% level, any signs of uncertainty among policymakers could hamper support for the Euro in the short-term. In addition, any mention of further quantitative easing will be subject to intense scrutiny by speculators.
Current GBP, EUR Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3582 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7362 today.