Chance for Greater GBP/EUR Exchange Rate Gains on Next Week’s UK PMIs
The Pound (GBP) has staged a recovery against the Euro (EUR) today, rising to a level of €1.1035 on the GBP/EUR exchange rate.
For context, however, Pound Sterling is still trading near the lowest exchange rate since September 2017; this was a rate of €1.099 reported on Tuesday.
This current poor performance is down to the ongoing uncertainty about the Brexit process – GBP traders remain concerned that a no-deal Brexit is on the horizon.
The situation hasn’t been helped by Prime Minister Theresa May’s assertion that a no-deal Brexit is better than a bad deal; this has increased the odds of such an outcome.
Looking ahead, the Pound might be able to advance against the Euro over Monday, Tuesday and Wednesday next week when UK PMI data for August comes out.
These readings will respectively cover manufacturing, construction and services sector activity.
In what may be a positive outcome for GBP traders, the manufacturing and services sector readings are both expected to have grown during August.
Of the two, the services sector is of much greater importance as it is the single largest contributor to UK economic growth.
A faster pace of services sector growth could trigger a sharp Pound to Euro exchange rate rise and might dispel some of the current uncertainties about Brexit.
On the other hand, however, if all three PMIs show slower economic activity then Pound could fall even further against the Euro.
Euro to Pound Exchange Rate Outlook: Is EUR/GBP Volatility ahead on Eurozone Confidence Data?
Looking at economic data that could influence the Euro to Pound (EUR/GBP) exchange rate, the next ecostats will come sooner on Thursday morning.
A range of Eurozone economic confidence readings are due out, covering business confidence, and perceptions of the services sector among other areas.
The Euro is at risk of falling against the Pound if these results print as forecast, given that lower levels of confidence and optimism are expected to be reported.
While none of the measures are expected to show a sharp decline in confidence levels, a string of declining readings could still cause EUR/GBP exchange rate losses.
Future EUR/GBP Forecast: Will Eurozone Inflation and Unemployment Data Boost Euro Demand?
Beyond Thursday’s Eurozone confidence data, the EUR/GBP exchange rate could also be affected by Eurozone inflation and unemployment rate stats out on Friday.
The inflation rate data will consist of initial estimates for August – economists believe that there could be no immediate change from 2.1% for the base yearly figure.
A reprint above the European Central Bank (ECB) target of 2% could raise Euro demand, however, as it would pressure the ECB to consider raising interest rates.
Current expectations are for an ECB interest rate hike at some point in 2019 – continued high inflation would increase the odds of a hike coming earlier in the year.
Further Euro gains could come from July’s unemployment rate reading – this is expected to show a supportive drop from 8.3% to 8.2%.
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