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Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Strengthen despite Cooling UK House Prices


The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened by around 0.21% on Monday morning.

Despite the fact that British economic data printed relatively disappointingly, the Pound edged higher versus many of its major peers. This can be attributed to ongoing positive sentiment towards the British asset after economic growth was revised higher in response to a run of better-than-expected domestic data results.

The shared currency, meanwhile, softened versus most of its major peers as the situation in Greece continues to weigh on investor confidence. With Greek banks running short of the collateral needed to avoid insolvency, the need for bailout funds to be unlocked quickly is heightened considerably.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3760.

At the close of Friday’s European session, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3798.

Having rallied significantly over the course of the week after Euro-area growth surpassed the UK and the US in the first-quarter, the single currency edged lower versus many of its major peers. The declination was the result of Greece falling into double-dip recession and expectations that the cash-strapped nation will not be able to secure bailout funds. With little options left to them, the Greek government caved into privatisation as they attempt to sell off the largest port in the country.

The Pound was the best performing currency over the past week as the surprise majority win for the Conservative party eased political uncertainty and concern over a massive policy overhaul. Positive domestic data results also aided the Sterling uptrend.

Pound Sterling (GBP) Exchange Rate Forecast to Trend Higher Versus the US Dollar (USD) after Citigroup Official called Sterling ‘Very Attractive’

Provided domestic data prints in line with economists’ forecasts, the Pound is likely to continue strengthening versus its major peers. This is mostly thanks to Citigroup official Steven Englander who stated that the UK asset was the ‘only major liquid currency with a significant yield other than the Dollar.’

One of the major domestic data publications will be Tuesday’s inflation data. Should the Consumer Price Index move away from near-negative territory, the British asset is likely to rally significantly. It is worth bearing in mind, however, that the most recent quarterly Inflation Report from the Bank of England (BoE) warned that the UK could potentially fall into deflation before moving towards the target 2.0%.  The Retail Price Index will also be of significance to those trading with the Pound.

Euro (EUR) Exchange Rate Forecast to Fluctuate Versus its Major Peers on Geopolitics

With the situation in Greece no closer to resolution, the ongoing difficulties are likely to weigh on demand for the shared currency. However, with several domestic data publications due for release over the coming week, there is the potential for single currency fluctuations.

Of particular importance is the German ZEW Survey for Economic Sentiment. This will be of interest considering that German was one of the few countries in the currency bloc that failed to register better-than-expected growth last week. Eurozone Inflation data will also be of interest to see whether the European Central Bank’s (ECB) quantitative easing program has brought the Eurozone further away from deflation.   

In addition to the British data already mentioned; Rightmove House Prices, Bank of England Minutes, Retail Sales, Public Finances, Central Government NCR, Public Sector Net Borrowing and PSNB ex Banking Groups will be of interest to those invested in the British asset.

In addition to the European data already mentioned; German ZEW Survey (Current Situation), Euro-Zone ZEW Survey (Economic Sentiment), Markit/BME Germany Manufacturing PMI, Markit Germany Services PMI, Markit/BME Germany Composite PMI , Markit Eurozone Manufacturing PMI, Markit Eurozone Services PMI, Markit Eurozone Composite PMI, ECB account of the monetary policy meeting, Euro-Zone Consumer Confidence, German Gross Domestic Product w.d.a, German Gross Domestic Product n.s.a, German IFO – Business Climate and, German IFO – Current Assessment, German IFO – Expectations will all be of interest to those invested in the shared currency.

At the close of last week, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3795 – 1.3873.