The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -1.00% on Monday afternoon.
After the Confederation of British Industry (CBI) cut its UK growth forecasts, the Pound softened versus its major peers. The report warned of the possible risks from a Greek exit and EU referendum. An absence of data to provoke changes is likely to see the Pound continue to trend lower over the course of Monday’s European session.
The Euro, meanwhile, edged higher versus many of its currency competitors despite continued difficulties with the Hellenic nation and a lower-than-forecast reading from Eurozone Investor Confidence. The appreciation can be linked to German Industrial Production bettering forecasts and a higher-than-anticipated German trade surplus.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3596.
Pound Sterling (GBP) Exchange Rate Forecast to Hold Losses against the Shared Currency after CBI Slashes UK Growth Forecast
As explained above, the Pound slumped versus its major rivals after CBI slashed its UK growth forecast and warned of the damage an EU referendum and a Greek exit from the Eurozone could have on UK economic prospects. ‘Risks to UK growth are tilted to the downside. A messy resolution of the Greek crisis could spark financial market and exchange rate volatility which could spill over into the real economy,’ the CBI said in its forecast.
In addition, the CBI report stated that continued weak productivity also posed a serious threat to the British economy. ‘While we are seeing a strong domestic picture, cracking the productivity conundrum would really help cement the recovery,’ said CBI director of economics Rain Newton-Smith.
With a complete absence of British economic data to provoke significant changes, the Pound is likely to continue trending lower versus its major competitors.
The Pound Sterling to Euro (GBP/EUR) exchange rate has fallen to a low of 1.3666 today.
Euro (EUR) Exchange Rate Forecast to Advance versus the Pound after German Data Impresses
Over the weekend the Euro was trending in a weak position following comments from Greek Prime Minister Alexis Tsipras, who stated that the proposals offered to Greece by the Eurogorup were ‘absurd.’ The frayed relationship between Greek officials and European Commission officials has amplified speculation of a forced Greek exit from the Eurozone.
Although geopolitics continues to weigh on demand for the single currency, the Euro advanced on Monday is response to better-than-expected data out of Germany. On a non-seasonally adjusted basis, German Industrial Production eclipsed expectations of 0.9% growth in April, with the actual result increasing by 1.4% annually. Also, German Trade Balance saw the surplus narrow by less-than-expected in April, having dropped from 23.1 billion to 22.1 billion. Somewhat slowing the Euro gains was the Eurozone Sentix Investor Confidence index, which came in at 17.1 in June, a larger drop than the forecast fall from 19.6 to 18.7.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Losses on Absence of Data
Given the complete lack of further domestic data publications to provoke volatility, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold losses for the remainder of Monday’s European session. With that being said, any new developments in Greece could see the shared currency pare gains.
Tuesday will be of significance for those trading the GBP/EUR pairing, with Eurozone Gross Domestic Product data due for publication. Additionally, UK Trade Balance data is likely to impact upon GBP/EUR trade.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.3760 today.