The Euro to Pound Sterling (EUR/GBP) exchange rate is likely to fluctuate today following the publication of the UK’s Services and Construction PMI and the Eurozone’s retail sales report.
Yesterday the pairing moved from a high of 0.7985 to a low of 0.7955 before settling to trade in the region of 0.7960.
The Euro to Pound Sterling exchange rate had begun the week trending in a stronger position, but EUR/GBP losses were incurred following the publication of the Eurozone’s Sentix investor confidence measure.
With the European Central Bank’s (ECB’s) interest rate decision looming, the news that sentiment in the 18-nation currency bloc declined by considerably more than expected wasn’t well received by investors.
The Sentix index plummeted to 2.7 in August, down from a reading of 10.1 in July and much worse than the anticipated reading of 9.0.
The Euro to Pound (EUR/GBP) exchange rate faltered and the Euro to US Dollar (EUR/USD) exchange rate fell to a multi-month low during the European session.
Although the ECB is expected to leave fiscal policy unaltered when it gathers on Thursday, speculation surrounding what action the central bank might take in the future to counter deflation fears did put the Euro under some pressure. In the opinion of strategist Sireen Harajli; ‘[ECB President Mario Draghi] will likely sound more dovish this week, especially that inflation reports continue to soften in Europe. Speculators have added to EUR shorts last week, adding to downward pressure on the Euro.’
The Pound, meanwhile, was supported by the expectation that this week’s UK Gross Domestic Product estimate for July (due to be published by the National Institution of Economic and Social Research – NIESR – on Wednesday) will show that the UK expanded following growth of 0.9% in June.
During local trading on Monday the US Dollar continued to benefit from last week’s impressive second quarter US growth data and employment figures.
The Euro also lost ground against the Yen and weakened against the Australian Dollar following the publication of better-than-forecast Australian retail sales data.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast
In the hours ahead movement in the Euro to Pound (EUR/GBP) exchange rate could be caused by several influential data releases, including the Eurozone’s retail sales report.
It has been projected that retail sales in the 18-nation currency bloc climbed by 0.5% on a monthly basis in June, having stagnated in May. On the year sales are believed to have jumped by 1.4%, double the year-on-year advance of 0.7% published the previous month.
A disappointing result could see the Euro to Pound Sterling (EUR/GBP) exchange rate extend declines. The pairing could be similarly affected by the UK’s Markit Services/Composite PMI.
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