Imminent BoE Rate Decision Fails to Weigh on Sterling (GBP) This Morning as GBP/EUR Conversion Rate Remains Strong
The early hours saw the UK’s RICS House Price Balance increase further than pundits had anticipated, rising from 44% to 53% in August to signal a decided pick-up in the domestic housing market. This positive data has helped shore up the Pound (GBP) ahead of today’s Bank of England (BoE) Rate Decision, in spite of a general expectation for a more dovish result from the Monetary Policy Committee (MPC). As such, the GBP/EUR exchange rate is presently regaining some lost ground to uptrend at 1.3722.
Both the UK’s Industrial and Manufacturing Production results for July posted shortfalls this morning to return the Pound (GBP) to a state of bearishness.
Optimism Abounded for the GBP/EUR Conversion Rate on Word of Substantial Take-over Bid for Amlin
Although the beginning of the week was somewhat lacking in UK data, the GBP/EUR exchange rate returned to a general uptrend as the initial impact of the nation’s underperforming PMI figures began to fade. While Tuesday saw the year-on-year BRC Like-for-Like Sales contract from 1.2% to -1% the relatively low importance afforded to the release prevented the Pound (GBP) from suffering any sustained losses as a result. The announcement of a potential 3.5 billion pound take-over bid for the British insurance company Amlin by a Japanese firm later in the day led Sterling to surge across the board as traders reacted positively to the suggestion, and the support it could lend to the wider domestic economy.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Fluctuates on Eurozone Growth News
Year-on-year German Industrial Production for July reported a smaller fall than forecast, to clock in at 0.5% rather than 0.3% on Monday. Offering a measure of reassurance as to the health of the Eurozone’s prime economic powerhouse, this nevertheless failed to significantly bolster the single currency (EUR) as the threat of the global slowdown continued to loom large as the Chinese stock market fell once again upon reopening. A weaker Trade Balance for Germany on Tuesday did not do much to lift Euro sentiment, although a surprise improvement on the Eurozone GDP saw the GBP/EUR pairing brought down from its peak of 1.3805 yesterday afternoon.
UK Manufacturing Production Contracted Today to Weigh on the Outlook of the British Pound (GBP)
Ahead of today’s raft of UK data releases the Pound Sterling to Euro (GBP/EUR) exchange rate experienced another limited uptick as investors hope for a return to more positive numbers for the nation, particularly in advance of Thursday’s Bank of England (BoE) Rate Decision. However, that sentiment stands to be quite short-lived as shortfalls became apparent across the board. Manufacturing Production in July contracted by -0.5% instead of remaining static as had been expected, while the Industrial Production figure reported a larger decline than anticipated at 0.8%. Another round of disappointment has pushed the Pound down against rivals, holding the GBP/EUR conversion rate onto a downtrend at 1.3723.
GBP/EUR Exchange Rate Forecast: Dovish Trend Stands to Continue Before BoE Data Release
As these latest figures bode ill for the tone of the upcoming BoE Rate Decision and 12-month Inflation Forecast the Pound is unlikely to experience any particular resurgence in the latter half of the week. However, a sufficiently hawkish tilt to the central bank’s commentary may prompt some renewed demand for Sterling and thus shore up the GBP/EUR conversion pair to regain some of its recently ceded ground.
With no new data from the Eurozone until Friday’s German Consumer Price Index figures, the single currency is unlikely to particularly drive the movement of the pairing over the coming days.
Current GBP, EUR Exchange Rates
At time of writing the Pound Sterling to Euro (GBP/EUR) pairing is continues to slump in the region of 1.3727, while the Euro to Pound Sterling (EUR/GBP) exchange rate is making gains at 0.7285.