GBP/EUR Conversion Rate Predicted to Strengthen with British GDP Still Considered Robust
The Pound Sterling to Euro (GBP/EUR) exchange rate rallied by around 0.7% on Wednesday afternoon.
Despite the fact that the final figures for third-quarter British Gross Domestic Product came in below expectations, the Pound held gains versus all 16 of its most traded major peers. It is fair to say, however, that the Pound is holding a comparatively weak position having dived significantly yesterday in response to higher-than-anticipated UK government borrowing. Third-quarter Gross Domestic Product was forecast to come in at 2.3% but the actual result dropped to 2.1% on the year. However, the Pound is holding daily gains given that British GDP is still robust and the UK is still one of the best performing economies of 2015.
‘Growth in the UK may have cooled, but it is still one of the best performing Group-of-10 economies,’ said Jane Foley, a senior currency strategist at Rabobank International in London. ‘Inflation is subdued and the BOE is in no rush to hike’ interest rates, she said before the data report. The central bank ‘is still happy to signal that the next policy move will be a tightening. This should keep the Pound from falling too far.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3622.
EUR/GBP Conversion Rate Predicted to Hold Losses after French GDP Missed Estimates
The Euro advanced significantly yesterday after January’s German Consumer Confidence eclipsed the market consensus. The single currency struck a fresh two-month high versus the Pound during Tuesday’s European session. On Wednesday morning, the common currency softened versus its major peers in response to disappointing domestic data. French Gross Domestic Product was predicted to advance by 1.2% in the third-quarter, but the actual result only saw 1.1% growth. As the final significant European data publication before the Christmas break, the shared currency is likely to continue to trend lower throughout the remainder of the week’s trade.
The current political uncertainty in Spain is also likely to continue to weigh on sentiment towards the single currency. ‘This is the end of the bipolar era in Spain,’ said François Lafond, the executive director of EuropaNova, a research group based in Paris. ‘The same thing is happening in France, in Italy and other countries. We now have a fragmented political system all around Europe.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3526 during Wednesday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains ahead of US Durable Goods Orders
Given the absence of further domestic data pertaining to both Europe and the UK today, the Pound Sterling to Euro (GBP/EUR) exchange rate has the potential to hold gains for the remainder of today’s trade. With that being said, however, today’s US economic data has the potential to provoke market volatility. This is especially true given thin trading volumes. November’s US Durable Goods Orders and Core Personal Consumption Expenditure will be likely to cause Euro changes thanks to negative EUR/USD correlation.
Christmas Eve is likely to see GBP/EUR movement in response to UK BBA Loans for House Purchase data. US labour market data may also cause Euro movement tomorrow.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.3663 during Wednesday’s European session.