The short term Pound Euro exchange rate forecast could see drastic changes in response to Thursday’s news following GBP/EUR’s mixed movement this week. While Sterling has been weakened by Tuesday and Wednesday’s underwhelming ecostats, GBP/EUR could plunge even further below its current levels of 1.1760 depending on the Bank of England’s (BoE) Thursday meeting.
Pound (GBP) Down from Best Rates Vs. Euro (EUR) after Inflation Stats
Tuesday’s session saw the Pound give up its Monday highs and fall below the week’s opening levels against many of its major rivals as GBP investors responded to Britain’s August inflation results.
Inflation was still above early-2016 levels, coming in at 0.3% month-on-month and 0.6% year-on-year. However, it disappointed markets hoping for a yearly increase to 0.7%, and let down speculation that the low value of the Pound could cause a surge in consumer prices.
As a result, investors began to adjust their Bank of England (BoE) forecasts, with many now expecting that the door would be left open for further easing regardless of the perceived rebound in UK economic activity throughout August.
Euro (EUR) Holds Ground Despite Mixed Data
Pound Sterling (GBP) was unable to recover from its Tuesday plummet on Wednesday as Britain’s August jobless claims and July’s employment figures were too mixed to inspire. The Euro, on the other hand, was able to hold its ground against Sterling thanks to the Eurozone’s own mixed data.
Following last week’s surprisingly hawkish European Central Bank (ECB) meeting, Tuesday’s session boosted the Euro slightly thanks to news that Eurozone economic sentiment had improved from 4.6 to 5.4 in September – according to a survey from ZEW.
While the day’s German stats were unimpressive, the Euro held its ground and muted Sterling’s recovery attempts.
Wednesday’s mixed industrial production report also helped slightly, as while the monthly report printed a contraction of -1.1%, the yearly score beat forecasts of -0.8% by coming in at -0.5%.
Pound Euro Exchange Rate Forecast: Bank of England Meeting in Focus
Thursday’s session will be vital for this week’s Pound Euro exchange rate forecast for many reasons, most importantly of all the Bank of England’s (BoE) first policy meeting since it introduced aggressive stimulus measures in August.
Markets generally do not expect the bank to expand its easing measures in this week’s meeting, but following mixed stats it is speculated that the bank will at least leave the door open for further easing over the coming months.
If the bank hints that further easing is on the way despite August’s uptick in UK activity, the Pound will likely see additional declines in value later this week. However, if the bank expresses confidence in its current easing package, the Pound could recover.
As for the Euro, Thursday will see the publication of the Eurozone’s final August Consumer Price Index (CPI). This is expected to come in at a low 0.1% month-on-month and 0.2% year-on-year.
If inflation meets preliminary scores, markets are unlikely to be inspired into buying the Euro. However, better-than-expected scores could strengthen the shared currency while worse scores would soften any GBP/EUR weakness by causing the Euro to lose appeal.
At the time of writing, GBP/EUR trended in the region of 1.1760, while EUR/GBP traded at around 0.8500. Downward movement is expected in this week’s Pound Euro exchange rate forecast.
Comments are closed.