The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range on Thursday afternoon.
After the Bank of England (BoE) opted to hold the cash rate, as economists’ had anticipated, the Pound strengthened versus many of its closest rivals. The appreciation can be attributed to positive data out of Europe and a rise in UK car registrations.
The Euro, meanwhile, strengthened versus its major rivals in response to mostly positive domestic data results. The appreciation was short-lived, however, with issues in Greece dominating trader focus.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3623.
Pound Sterling (GBP) Exchange Rate Forecast to Hold Steady against the Shared Currency ahead on Positive Data
The BoE’s Monetary Policy Committee (MPC) held the benchmark interest rate as expected by most analysts. The recent poor services and manufacturing growth points towards a sluggish second-quarter which is likely to continue to weigh on policymaker decisions for some time to come.
‘The Monetary Policy Committee’s (MPC) meeting minutes for May showed a unanimous nine votes to zero for keeping rates unchanged. Such is the case this year as even policy hawks agree that the current easing monetary policy is appropriate given the slower pace of growth,’ said senior currency analyst Alfonso Esparza.
New Car Registrations saw an annual increase of 5.7% in May which signalled the 39th consecutive month of growth. The rise has been linked to demand for electric and/or economic cars, as Mike Hawes, SMMT chief executive, states; ‘The remarkable growth in demand for plug-in vehicles is expected to continue as the range of ultra-low emission vehicles on sale increases. Meanwhile, we anticipate a natural levelling out of the overall new car market throughout the remainder of 2015.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3543 today.
Euro (EUR) Exchange Rate Forecast to Hold Steady against the British Pound despite Greek Woes
European economic data produced mostly positive results on Thursday which saw the common currency advance versus some of its peers. Although the German Construction PMI dropped to a four-year low of 50.8, the Eurozone Retail PMI and German Retail PMI rose impressively in May.
On the Eurozone Retail PMI, Phil Smith, economist at Markit stated; ‘The headline Eurozone Retail PMI advanced further in May, hitting its highest level for more than four years. The performances among the big-three remained highly unbalanced, however, with solid and accelerated growth in Germany contrasting with further, albeit only modest, contractions in France and Italy. Indeed, hiring of extra staff at German retailers was just about sufficient to offset cutbacks elsewhere, leading to an overall rise in employment.’
Common currency gains have been somewhat sluggish, however, with trader focus still set on Greece. With a €300 million International Monetary Fund (IMF) payment due on Friday, the lack of progress made in talks with the Eurogroup to unlock bailout funds has rocked investor confidence significantly.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Fluctuate on Geopolitics
Given that many significant deadlines for Greece are fast-approaching, there is heightened potential for the Pound Sterling to Euro (GBP/EUR) exchange rate to fluctuate over the remainder of Thursday’s European session. Friday will be significant for the pairing with the BoE inflation forecast for the next 12 months due for release.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3643 today.