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Pound Sterling to Euro Exchange Rate Continues to Edge Higher amid UK Growth Hopes

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Pound to Euro Exchange Rate Continues to Gain amid Euro Weakness

Despite broadly mixed movement on UK election jitters in recent weeks, the Pound Sterling to Euro (GBP/EUR) exchange rate has ultimately been edging higher. This has been due to weakness in the Euro (EUR) keeping the shared currency from climbing.

After opening last week at the level of 1.1585, GBP/EUR spent most of the week trending with an upside bias.

GBP/EUR briefly touched a fortnight high of 1.1646 in the middle of the week, but trended lower in the following sessions and closed the week at the level of 1.1595.

Since markets opened this week, GBP/EUR has been climbing again on positive forecasts for the UK economy, but gains are limited amid election uncertainty and the pair has only gained to trend near the level of 1.1610 at the time of writing.

Pound (GBP) Exchange Rates Buoyed as Britain Avoids Recession

While demand for the Pound (GBP) has been highly limited by UK general election uncertainties in recent weeks, the British currency has seen sturdier demand since markets opened this week.

Investors bought the British currency earlier amid speculation that Britain’s economy may have avoided another quarter of contraction, following a -0.2% decline in Q2.

Q3 growth was expected to have rebounded slightly at 0.4%, avoiding contraction and a recession.

Ultimately, UK growth came in at 0.3%, slightly lower than expectations but still confirming that a recession was avoided.

Hopes that growth will continue to steady, even as the Brexit process continues to be drawn out for a longer period of time, are leaving the Pound relatively appealing.

Still, uncertainty surrounding the potential outcome of December’s upcoming UK general election are keeping a lid on the Pound’s potential for gains.

Euro (EUR) Exchange Rates Floundering amid Rival Strength and Lack of Support

Investors have had little reason to buy the Euro in recent sessions, as the shared currency’s rivals have become comparatively more appealing.

The Euro’s biggest rival, the US Dollar (USD), has been strengthening over the past week amid speculation that tensions between the US and China are finally softening.

Due to the negative correlation the Euro and US Dollar (USD) share, the Euro has been weakened by US-China trade developments. Pound resilience has also weighed on the Euro.

On top of rival movement, the Euro remains unappealing amid concerns about the Eurozone’s economic and political outlooks.

Economists are concerned that Germany’s economy remains in recession, and Eurozone political uncertainty has also worsened following Spain’s fourth general election in as many years, which ended in a hung parliament.

Pound to Euro (GBP/EUR) Exchange Rate Investors Await Week of Influential Data

Following today’s UK growth results, there is still plenty of UK and Eurozone data due for publication through the rest of the week.

While Pound investors are most likely to remain focused on UK politics and election speculation, some upcoming stats could cause movement as well.

Tomorrow will see the publication of UK job market stats, followed by inflation on Wednesday and retail sales on Thursday.

Upcoming Eurozone data is even more likely to be influential however, as it may be able to influence Eurozone growth speculation if it surprises investors.

ZEW’s German and Eurozone economic sentiment stats from November will come in tomorrow, with German inflation and Eurozone production stats due on Wednesday.

Thursday’s session will be particularly influential though, with German and Eurozone growth stats, as well as French and Eurozone employment figures, due for publication.

Of course, any major developments in UK or Spanish politics could also influence the Pound to Euro (GBP/EUR) exchange rate.