GBP/EUR Exchange Rate Trending within a Limited Range after British CPI Betters Estimates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range on Tuesday afternoon.
British data produced mostly positive results today although the ecostats had minimal impact on the Pound exchange rates. Of particular significance was November’s Consumer Price Index which equalled the market consensus of 0.1% on the year. Monthly Consumer Prices bettered estimates of -0.1% with the actual result hitting 0.0% in November. However, given that British inflation has remained low for a long period and crude oil prices remain close to an 11-year low, many traders predict that UK inflation will return to negative territory in December.
‘UK inflation remained largely absent in November, and looks set to remain weaker for longer than forecasters have recently been expecting,’ said Chris Williamson, chief economist at data firm Markit. ‘Falling prices for oil and other commodities are helping drive down companies’ costs. Weak wage pressures and fierce competition in the retail sector are also helping keep a lid on prices. Hence clothing prices showing a record fall between October and November.’
Also weighing on demand for the British asset was news from Ladbrokes betting company that they are offering a 40% chance that the UK will leave the European Union following the 2017 referendum. This is the highest percentage given so far, spooking investors well ahead of the actual event.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3800.
EUR/GBP Conversion Rate Predicted to Trend Narrowly despite Positive European Ecostats
European economic data produced positive results on Tuesday. December’s ZEW Eurozone Economic Sentiment Survey advanced from 28.3 to 33.9, whilst the German version bettered estimates of a rise from 10.4 to 15.0, with the actual result reaching 16.1. Eurozone labour market data also produced positive results in the third-quarter. However, Euro gains seen in early-trade were short-lived after European Commission President Jean-Claude Juncker warned against Euro-area government complacency.
‘Our economic recovery is still fragile,’ Juncker told the European Parliament on Tuesday in Strasbourg, France. ‘From my perspective, the crisis is not over and there should be no complacency. Even if we are helped by the action of the European Central Bank, we have only a short window of opportunity to press ahead with our agenda for reforms.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3684 during Tuesday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: FOMC Rate Decision to Provoke Market Volatility
Tomorrow’s Federal Open Market Committee (FOMC) interest rate decision is very likely to provoke significant market volatility tomorrow. With trader focus dominated by the outcome of said decision, there is a high chance that domestic data has minimal impact ahead of the announcement. With that being said, however, there are several influential domestic data publications tomorrow with the potential to provoke changes for the GBP/EUR exchange rate.
For those invested in the Euro: German Manufacturing, Services and Composite PMIs and Eurozone Manufacturing, Services and Composite PMIs all have the potential to provoke Euro changes. For those invested in the UK asset, Average Weekly Earnings data will be closely watched. This is because some Bank of England (BoE) officials have highlighted the slow pace of wage growth as one of the main reasons to avoid making monetary policy less-accommodative.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.3859 during Tuesday’s European session.