At the close of Friday’s European session, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3805.
Over the past few weeks domestic data has had less of an impact on both the Pound and the shared currency. This is as a result of political uncertainties weighing on demand for the Pound and geopolitical tensions in Europe stymieing single currency investment.
Pound Sterling (GBP) Exchange Rate Forecast to Decline ahead of General Election
With the forthcoming general election forecast to be one of the most hotly contested in modern political history, the Pound has seen a lack of demand amid political uncertainties. With opinion polls showing different results and no clear majority, speculation is rife that the UK could be on the brink of a significant policy overhaul. That is weighing heavily on investor confidence.
With the backdrop of political uncertainty influencing Sterling positions, there is a potential for the coming week’s domestic data to be less impactful than it ordinarily would have been. One publication which will be significant, however, is the Consumer Price Index. With the Bank of England (BoE) concerned that low inflation would make a rate hike problematic, inflation needs to move away from negative territory in order to satisfy the Monetary Policy Committee (MPC).
However, for those invested in the Pound; Claimant Count Rate, Jobless Claims Change, Average Weekly Earnings, Average Weekly Earnings ex Bonus, Unemployment Rate and Unemployment Change is likely to be of interest and have the potential to provoke Sterling volatility.
Euro (EUR) Exchange Rate Forecast to Fluctuate on Greek Situation
The newly elected Greek government is facing a dilemma as to whether or not to please creditors at the expense of the people who voted them in power. With a short ultimatum to produce a set of reforms that the Eurogroup can agree upon, trader focus is likely to be dominated by developments in the cash-strapped nation.
With geopolitics driving common currency changes, European economic data publications could have minimal impact. Even the European Central Bank (ECB) Rate Decision isn’t likely to provoke significant volatility considering no one expects any significant changes at this early stage of quantitative easing.
However, for those trading with the Euro; Eurozone Industrial Production, German Consumer Price Index, EU-Harmonised German CPI, ECB Deposit Facility Rate, ECB Marginal Lending Facility, ECB Survey of Professional Forecasters, Eurozone Consumer Price Index and Eurozone Core CPI all have the potential to provoke single currency movement.
As the general election draws ever closer, opinion polls will likely have a greater impact upon Sterling movement.
Should the Greek government opt to side with creditors over its people, Europe won’t necessarily avoid a catastrophe. If the Greek government get ousted in response to failing to commit to promises, a replacement government is likely to tread the muddy waters of anti-austerity politics.
Even if fears of a Greek exit from the Eurozone ease somewhat, the single currency is unlikely to sustain any significant gain. This is because traders will likely to avert focus towards the European Central Banks’ (ECB) quantitative easing scheme which is still very much in its infancy.
At the close of last week, the Pound Sterling (GBP/EUR) exchange rate was trending within the range of 1.3771 and 1.3839.