The Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.4% on Friday afternoon.
In a reversal of early losses, the GBP/EUR exchange rate advanced as Friday’s European session progressed. The appreciation can be attributed to negative EUR/USD correlation. The US Dollar rallied in response to much better-than-anticipated Non-Farm Payrolls and Unemployment Rate data. This caused the single currency to dive across the board. The improved prospects of a December Federal Reserve benchmark rate hike is likely to see the Euro trending lower for some time to come.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4024.
GBP/EUR Conversion Rate Predicted to Edge Lower as Dovish BoE Weighs
Despite the fact that British economic data produced mostly positive results on Friday, the Pound continues to hold a weak position versus its currency rivals. The Pound Sterling softened across the board with the only exceptions being gains against the Turkish Lira and Russian Ruble. This lack of demand for the British asset can be linked to yesterday’s particularly dovish Bank of England (BoE) inflation and growth outlooks. The fact that the Monetary Policy Committee was split 8-1 in favour of holding accommodative policy also continues to weigh heavily on Sterling sentiment.
However, today’s data produced a mixed-bag of results erring towards positivity. Robust domestic data but a weaker currency is an ideal situation for the BoE after overvaluation concerns were flagged. Whilst September’s Industrial Production failed to accelerate in line with expectations, Manufacturing Production in September contracted less-than-anticipated. September’s Trade Balance data produced particularly positive results with Total Trade Balance, Trade Balance Non-EU and Visible Trade Balance all seeing the deficit narrow beyond expectations.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3939.
EUR/GBP Conversion Rate Predicted to Hold Gains despite Soft German Industrial Production
Despite the fact that European economic data has produced mostly disappointing results of late, the common currency edged higher versus many of its currency rivals following a speech yesterday from European Central Bank (ECB) President Mario Draghi. Although Draghi reiterated the bank’s willingness to ease policy further to provoke Euro-area price pressures, he also added that it may not be necessary with recent data suggesting that the current program of quantitative easing is finally having an impact.
However, today’s German economic data is the latest in a succession of poor ecostats. September’s German Industrial Production saw just 0.2% growth; missing the median market forecast 1.3% output growth. On the month, German Industrial Production saw a surprise contraction of -1.1%. ‘Disappointing industrial production doesn’t bode well for German third-quarter gross domestic product,’ said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt. ‘The Chinese and emerging-markets slowdowns are also leaving their marks on the Eurozone’s largest economy.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3922 during Friday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: US Non-Farm Payrolls to Provoke Volatility
Prior to the sharp Sterling depreciation seen following ‘Super Thursday’, the Pound Sterling to Euro (GBP/EUR) exchange rate advanced significantly; breaking through key support levels. Many economists agree that this was more a result of Euro weakness in response to US Dollar strength rather than an outright Sterling appreciation. Given that the EUR/USD conversion rate is negatively correlated, today’s US Non-Farm Payrolls data is likely to have a significant impact on the GBP/EUR exchange rate.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3986 today.