GBP/EUR Conversion Rate Predicted to Advance despite Weak UK Construction Output
After British construction output failed to meet with expected growth the Pound edged lower versus many of its currency rivals. However, the British asset continues to hold a position of strength versus the Euro as the US Dollar holds a comparatively high value and geopolitical tensions in Europe weigh on demand for the common currency. September’s UK Construction Output contracted by -0.2% on the month, failing to meet with the median market forecast 1.5% output growth. On an annual basis, September’s British Construction Output contracted by -1.6%, well beyond the market consensus of a -0.4% drop in output.
Commenting on the data, Mark Robinson, chief executive of Scape Group, said: ‘Although the ONS has shown an overall fall in output of 2.2 per cent in the last quarter, the view on the ground has been more positive – the CIPS/Markit PMI data from the past few months has consistently shown that contractors are optimistic, with new orders coming in and a strong pipeline of projects. This is exactly the longer term view we need to take. Building the new homes and supporting infrastructure that Britain needs will require greater collaboration and innovation across the sector, as well as better skills training and reform of the planning system to allow quick and strategic decision making.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4170.
EUR/GBP Conversion Rate Predicted to Dive on ECB Stimulus Expectations
With mounting geopolitical uncertainty in the Eurozone weighing on investor sentiment, the single currency is holding a competitively weak position versus its major peers. Of particular detriment to confidence was the re-emergence of anti-austerity striking in Greece. This provoked fears of long-term uncertainty thanks to a repeat of the will they/won’t they ‘Grexit’ situation. Additional concerns can be attributed to a dramatic shift in Portuguese political outlook after anti-austerity socialists ousted the centre-right government.
Also weighing on demand for the single currency was slower-than-expected Eurozone Gross Domestic Product. After Italy, Portugal, the Netherlands and Greece all failed to meet with expected growth; third-quarter Eurozone GDP came in at 1.6% growth: missing the market consensus of 1.7% growth annually. This has bolstered the case for the European Central Bank (ECB) to loosen monetary policy in the near-term as confirmed by economist Maxime Sbaihi, who stated; ‘Today’s GDP figures show that the Euro area is growing but taking up slack too slowly. That’s why the ECB is contemplating adding more stimulus.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.4077 during Friday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains on US Dollar Strength
Given that the US Dollar is holding a comparatively strong position, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains over the weekend.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4201 during Friday’s European session.