Having been widely tipped as the best performing currency of 2014, the Pound Sterling has had a less-than-satisfactory August. The schizophrenic behaviour of Sterling in the past few months has led people to speculate on a year of two halves; with the increased likelihood that Sterling will finish the year in a negative position.
The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2562.
The impact of a string of negative domestic data results last week has had a hangover effect on Sterling, and it is struggling to claw back the losses versus many of its major peers. A distinct lack of meaningful data hasn’t helped the situation. The poor retail sales data from Thursday of last week has had an elongated effect as a result of having had very little domestic data to enable Sterling to make any real gains.
The Euro has been one of the few currencies with a plethora of domestic data releases throughout last week and the course of the current week. However, the results have been generally poor and the Euro has suffered as a consequence.
The Pound Sterling to Euro exchange rate has hit a low today of 1.2558.
With the shortage of domestic data weighing heavily upon Sterling traders have been pulling away from the Pound. The mounting confusion and increasing unknowns surrounding the Scottish bid for independence has also had a detrimental effect on the demand for the Pound.
Given the strong trading relationship between the UK and the Eurozone, the recent string of disappointing domestic data releases from the Eurozone has also had a negative impact on Sterling.
As mentioned above; the Euro has plenty of domestic data releases to gauge movement, but unfortunately they don’t make good reading for those invested in the single currency.
Wednesday’s year-on-year German Import Price Index was revealed to have retracted beyond the forecast level of -1.4% with the actual data posting at -1.7%.
The German Consumer Confidence Survey also posted negatively having fallen to 8.6, despite having been forecast to remain consistent with the previous figure of 8.9.
Forecast for the Pound Sterling to Euro Exchange Rate
Thursday will be pivotal, from a European economic perspective, with several data releases of high weighting in terms of market movement. Those invested in the Euro will be hoping that the German Unemployment Change, Unemployment Rate and the Consumer Price Index all post positively or at least meet with forecast figures.
Although there is little UK data on Thursday and nothing of high economic weighting, those backing the Pound will be hoping for improved results regarding Eurozone data.
The UK Consumer Confidence Survey will be of interest from a British economic perspective as it will indicate whether the recent negative retail sales data has correlated with consumer confidence.
The Pound Sterling to Euro exchange rate has hit a high today of 1.2578.
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