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Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Advance despite Mixed British Labour Data


GBP/EUR Conversion Rate Predicted to Rally after Carney Dismisses External Risk Factors

The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened by around 0.5% on Wednesday afternoon.

British economic data produced mixed results today erring towards negativity. October’s Jobless Claims Change saw 3,300 new benefit claimants which eclipsed the market consensus of 1,400. In the three months ending in September Average Weekly Earnings advanced by 3.0% on the year; missing the median market forecast 3.2% wage growth. In the same period, Weekly Earnings ex-Bonus saw 2.5% growth which failed to meet with expectations of 2.6% wage growth. However, these disappointing results were somewhat combatted by the ILO Unemployment Rate which bettered estimates of 5.4% with a drop to 5.3% in the three months ending in September. In addition, Employment Change eclipsed expectations of 120,000 with the actual result showing 177,000 newly employed.

Also helping to soften the blow from slower-than-expected wage growth and rising benefits claimants was a speech from Bank of England (BoE) Governor Mark Carney early this morning. Carney stated that the strength of the domestic economy was such that it will overshadow external risk factors. This is in contrast to the minutes pertaining to last Thursday’s Monetary Policy Committee (MPC) meeting in which policymakers highlighted the slowdown in China as one of the principle reasons for holding the cash rate.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4165.

EUR/GBP Conversion Rate Predicted to Soften amid Geopolitical Uncertainty

With the US Dollar seeing subdued trade amid concerns that overvaluation will drag on economic progress and may even cause the Federal Reserve to delay a benchmark rate hike, the Euro was trending narrowly versus its major peers. Also fuelling quiet market trade is mounting uncertainty regarding European geopolitical tensions. Yesterday saw creditors withhold payment to Greece amid dissatisfaction with the implementation of promised reforms.

Adding to geopolitical uncertainty was news from Portugal that the ruling centre-right political party was ousted by a coalition of left-wing anti-austerity party members. The new ruling party is likely to reject austerity measures imposed by creditors, stoking fears in investors who are experiencing deja vu and expecting a long period of uncertainty to weigh on demand for the Euro.

The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.4065 during Wednesday’s European session.

Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains despite Weak US Mortgage Applications

The solitary US data publication, MBA Mortgage Applications, produced a disappointing result having contracted by -1.3%. However, the Pound Sterling to Euro (GBP/EUR) exchange rate continues to hold gains despite a softer US Dollar as traders continue to worry about geopolitical tensions in Greece and Portugal.

Thursday may see GBP/EUR movement with the UK House Price Balance and German Consumer Price Index data due for publication.

The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4179 today.