Can Faster Pace of UK Wage Growth Push GBP/EUR Exchange Rate Higher?
The Pound (GBP) has fluctuated against the Euro (EUR) today, shifting between highs of €1.1217 and lows of €1.1185.
This tepid movement comes at a time of limited UK economic data; looking ahead, the Pound to Euro (GBP/EUR) exchange rate could rise sharply on this week’s news.
One of the first (and potentially most supportive) data releases will be Tuesday morning’s UK wage growth data, measuring changes to average earnings in June.
Economic forecasts haven’t been unanimous, but some optimistic analysts believe that the pace of wage growth could accelerate with and without wages included.
A faster pace of wage growth would be good news for UK households as it would increase their resilience to factors such as price increases caused by higher inflation.
Higher wages could also lead to increased UK retail activity, which would be another reason for a GBP/EUR exchange rate rise off the wage growth data.
Will Accelerating UK Inflation Rates Boost GBP/EUR Exchange Rate?
Beyond Tuesday’s UK wage growth data, the Pound to Euro (GBP/EUR) exchange rate could also be supported by this week’s inflation rate stats.
Out on Wednesday morning, these figures are tipped to show a faster pace of price growth for the year-on-year reading.
A forecast-matching result would see the rate of annual inflation in July rise from 2.4% from 2.5%, which would increase the pressure on the Bank of England (BoE).
A higher inflation rate increases the likelihood of a near-term interest rate hike; speculation about such an outcome could push the GBP/EUR exchange rate up.
Euro to Pound Exchange Rate Outlook: Is EUR/GBP Volatility ahead on German GDP Data?
There is a risk of the Euro (EUR) losing ground to the Pound (GBP) this week, when German GDP data is released on Tuesday morning.
Flash estimates for German GDP growth in Q2 2018 are expected to show a faster pace of quarterly economic expansion but a year-on-year slowdown.
Annual figures are typically more high-impact than quarterly ones, so this data could end up weakening the EUR/GBP exchange rate early in the week.
Additional losses could come from the later Eurozone-wide GDP readings, which are tipped to show slowing economic activity on the month and the year in Q2 2018.
Future EUR/GBP Exchange Rate Forecast: Will Eurozone Inflation Rate Stats Push Euro Higher?
The Euro (EUR) has a chance to rise against Pound Sterling (GBP) later this week when Eurozone-wide finalised inflation rate data comes out on Friday.
Current expectations are for a higher pace of annual price growth in July, with a shift from 2% to 2.1%.
While month-on-month inflation levels are expected to slow from 0.1% to -0.3%, a forecast-matching annual rise could still push the Euro up against the Pound.
As with UK inflation and the Bank of England (BoE), higher Eurozone inflation will increase the likelihood of a future European Central Bank (ECB) interest rate hike.