Pound Sterling to Euro (GBP/EUR) Exchange Rate Fluctuates after Jobs Data, BoE Minutes
Although the UK’s employment report showed that the nation added fewer-than-forecast positions in the three months through November, applications for unemployment benefits fell by more than projected and the UK’s unemployment rate dropped from 6.0% to 5.8%.
However, Sterling failed to benefit from the report as the Bank of England (BoE) meeting minutes showed that two policymakers retracted their votes in favour of an immediate interest rate increase at the last gathering.
The Pound Sterling to Euro (GBP/EUR) exchange rate declined on the reduced rate hike expectations, falling to a low of 1.3018 before moderating its decline to around -0.4%.
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GBP/EUR Exchange Rate Strengthens on Employment Expectations
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.6% on Tuesday even as the Eurozone’s economic sentiment report printed above expected levels.
Germany’s ZEW economic sentiment gauge also advanced to an 11-month high, but the Euro failed to benefit.
The expectation that tomorrow’s UK data will show a decrease in unemployment and an increase in average earnings bolstered the Pound and the British currency posted gains against several of its most traded peers.
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GBP/EUR Exchange Rate Trends Higher
The Pound may have lost almost a cent against the Euro yesterday, but the Pound Sterling to Euro (GBP/EUR) exchange rate was able to advance to a high of 1.3067 on Tuesday as the German Producer Price Index registered steeper-than-forecast monthly and annual declines.
The GBP/EUR pairing could fluctuate later today as the Eurozone publishes its ZEW economic sentiment surveys.
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GBP/EUR Exchange Rate Extends Losses
As the European session continued the Pound Sterling to Euro (GBP/EUR) exchange rate extended its decline to over 0.4% as bets that the ECB won’t introduce aggressive stimulus measures on Thursday supported the common currency.
The Pound Sterling to Euro (GBP/EUR) exchange rate brushed a low of 1.3033 over the course of trading.
The Euro also advanced by around 0.4% against the US Dollar. According to one industry expert; ‘Markets are not looking at the Eurozone’s current account surplus and deflation, factors that underpin the Euro. Everybody is just too tilted toward betting against the Euro.’
While French President Francois Hollande caused a bit of a stir by asserting that the ECB is planning to introduce quantitative easing on Thursday, his remarks had little impact on the Euro.
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GBP/EUR Exchange Rate Slips to 1.3039
As the European session progressed on Monday, the Pound Sterling to Euro (GBP/EUR) exchange rate fell by around 0.3% as investors speculated on the outcome of Thursday’s ECB meeting.
The news that the Eurozone’s current account surplus narrowed in November was also taken to be a positive sign given that industry experts have intimated that a strong surplus will prevent the Euro from weakening and have an adverse impact on the currency bloc’s growth prospects.
Today’s Eurozone Construction Output report showed a -0.1% on the month decline in November but annual growth of 2.2%.
According to Alliance News; ‘Output in the building sector slid 0.2% in November from last month and the civil engineering activity dropped 0.1%.’
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Last week the Pound Sterling to Euro (GBP/EUR) exchange rate advanced by the most for two years, achieving a seven-year high off the back of the Swiss National Bank’s (SNB) unexpected policy change.
GBP/EUR Exchange Rate Climbs above 1.31
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced beyond the 1.31 level on Thursday in response to the SNB scrapping its cap with the Euro and largely held gains into the weekend.
Given that the SNB was the largest buyer of Euros, the central bank’s surprising U-turn on the subject of the 1.20 EUR/CHF cap saw the common currency plummet across the board.
The Euro also dropped to an 11-year low against the US Dollar.
The Pound Sterling to Euro (GBP/EUR) exchange rate achieved a high of 1.3103
The impact of the SNB decision is still being felt, and the Euro remains soft against the majority of its currency counterparts.
Could the Euro to US Dollar (EUR/USD) Exchange Rate Recover Losses?
However, according to Nomura Holdings Inc, the Euro could rebound against the US Dollar – potentially advancing to the 1.20 US Dollar level – if the European Central Bank (ECB) disappoints stimulus expectations this week.
According to one Nomura representative; ‘Even if the ECB decides to introduce quantitative easing, a lack of details could send the Euro back to levels before the Swiss move last week. The Euro could surge to 1.20 US Dollars if the ECB only keeps repeating itself.’
That being said, the Euro is likely to continue trending in a weaker position against the US Dollar ahead of the ECB gathering on Thursday.
A lack of US data could limit EUR/USD volatility in the hours ahead.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
While UK data is in short supply this week, the Eurozone is set to release Current Account and Construction Output figures, both of which could inspire Pound Sterling to Euro (GBP/EUR) exchange rate movement.
The Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.3063
As the week progresses investors with an interest in the GBP/EUR pairing will be focusing on the German ZEW economic sentiment surveys, the UK’s employment figures and the publication of minutes from the latest Bank of England (BoE) policy meeting.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7646
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3077
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5147
The US Dollar to Pound Sterling (USD/GBP) exchange rate is trading in the region of 0.6599
