GBP/EUR Conversion Rate Predicted to Trend Statically on Absence of British Data
With British economic data lacking completely, the Pound has seen comparatively subdued trade on Friday morning. A slight lean towards appreciation can be attributed to the second-consecutive day of gains in China’s equity market. The Shanghai Composite Index advanced by 1.6% at the close of Friday’s Asian session. This is supportive of demand for the Pound because of a recent announcement by Chancellor George Osborne that the government intends to merge the British and Chinese equity markets.
Many analysts have predicted subdued Sterling trade over the coming weeks, however, amid speculation of long-term delays to a Bank of England (BoE) rate hike. With the general consensus that the BoE will not hike the cash rate ahead of the Federal Reserve, uncertainty regarding Fed policy outlook equates to uncertainty regarding the BoE outlook. Also weighing on investor confidence is the prospect of the European Union referendum. Although 2017 seems a way off yet, preparations for negotiations have already begun and many politicians are already showing which way they lean. The long-term political uncertainty is likely to have a significantly negative impact on demand for the British asset.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3615.
EUR/GBP Exchange Rate Forecast to Hold Steady despite Low Eurozone CPI
After domestic data met with estimates, the shared currency saw minimal movement. On the year, the final figure for September’s Consumer Price Index held at -0.1%. On the month, September’s Eurozone Consumer Prices hit the median market forecast 0.2%. Core Consumer prices equalled the market consensus of 0.9%. Whilst the inflation data matched previous estimates, the low level supports speculation that the European Central Bank (ECB) will look to expand quantitative easing.
Yesterday, Ewald Nowotny, who sits on the board of the ECB, said that it was obvious that inflation was well below the ECB’s target, stating; ‘The ECB is using the monetary policy instruments available – but it is quite obvious that in the current macroeconomic situations, additional sets of instruments are necessary.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3572 today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Steady ahead of US Consumer Confidence
Given that the EUR/USD exchange rate is negatively correlated, US data is likely to impact Euro movement. A poor result from US Consumer Confidence will cause the single currency to rally and the Pound to drop. The UK asset would decline because poor data suggests delays to a Fed, and therefore a BoE, rate hike.
Next week should see significant GBP/EUR fluctuations with several influential domestic data publications to provoke volatility. Of particular significance will be the ECB rate decision and accompanying QE calculations. Many analysts have predicted subdued Sterling trade, however, amid uncertainty regarding the BoE’s rate outlook and political uncertainty ahead of the EU referendum.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3624 today.