Although failing to meet forecasts, growth in the UK construction sector has bolstered GBP/EUR and GBP/USD exchange rates today. The Euro is weak as investors await Eurozone GDP data, despite positive figures for Germany having already been released, while the US Dollar is positive ahead of key sales and sentiment figures.
GBP/EUR Holds Gains Despite Strong German GDP Figures: Traders Await Eurozone GDP
The UK construction sector grew in December, which investors have interpreted positively despite the figures failing to hit their forecasts. Monthly construction output grew at a seasonally-adjusted rate of 1.5%, after the previous month’s decline of -1.1%, while year-on-year (YoY) output increased 0.5% after a -0.9% decline in November. The figures may have disappointed predictions, but after the poor performance of the industrial sector and manufacturing in December, it seems investors are happy just to see some growth.
Pound Sterling continues to make bullish gains on the Euro despite the release of GDP figures which show strong growth in Germany. The slowdown in China and stock market routs may be making companies jittery, but the German economy has still managed to benefit from a combination of record-low unemployment and cheap oil to boost domestic demand. German GDP grew at a seasonally-adjusted rate of 0.3% in the final quarter of 2015, according to preliminary figures, while year-on-year (YoY) GDP increased by 2.1%, compared to the previous 1.7% growth, above the 2% forecast.
Despite that the figures will have been positive enough to compensate for a slowdown in final-quarter Italian GDP and accelerating Spanish deflation, the GBP/EUR exchange rate is still advancing as investors await the final Eurozone GDP figures due out later today.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Strong as Traders Await First Key Data Since Yellen Testimony
The US Dollar is currently performing strongly ahead of today’s key data releases. Now that Federal Reserve Chair Janet Yellen has signalled that the Fed is likely to continue its rate hike cycle, depending upon economic conditions, high impact releases will help investors underpin or undermine the case for a rate hike in March. Advance Retail Sales and the University of Michigan Confidence index will be the first key data due out since Yellen’s public appearance.
Regardless of US strength, the volume of correctional trading for Pound Sterling is pushing ‘Cable’ up.
Pound Sterling to Euro (GBP/EUR), US Dollar (GBP/USD) Exchange Rate Forecasts
The Eurozone may have seen important preliminary German GDP figures already today, but final Eurozone GDP stats are also due for release. Construction Output figures were the only data due for the UK today, while the Advance Retail Sales for January begins the US data slew.
Current GBP, EUR, USD Conversion Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading in the region of 1.2868, with the Euro to Pound Sterling (EUR/GBP) exchange rate trending around 0.7769.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trading in the region of 1.4526, with the US Dollar to Pound Sterling (USD/GBP) exchange rate trending around 0.6884.