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Pound Sterling to Euro Exchange Rate Forecast: Will Lower UK Consumer Confidence Drag GBP/EUR Lower?

Pound Sterling Currency Forecast

Risk of GBP/EUR Exchange Rate Losses on Falling Consumer Confidence

The Pound (GBP) has traded higher against the Euro (EUR) at €1.1174 today, but remains at risk of falling in the pairing on Friday morning’s economic data.

The day might start off on a negative note, as GfK’s September consumer confidence reading is predicted to show a worsening of an already-bad printing.

If the consumer confidence measure shifts from -7 points to -8 as expected then the Pound could make an early loss against the Euro on Friday.

Consumer confidence levels have been negative since early 2016 and if there are no signs of an improvement in September then the Pound could drop.

Future Pound to Euro Outlook: Will Confirmation of GDP Growth Boost GBP Demand?

While Friday might open with GBP/EUR exchange rate losses, the Pound to Euro exchange rate could recover later in the morning when UK GDP stats come out.

Covering Q2 2018, these readings are expected to show a faster pace of economic expansion on the quarter and the year.

A confirmation that GDP growth increased over the April-June period could be enough to boost demand for the Pound, as it bodes well for the second half of 2018.

If the GDP readings prove to be better than expected and rise above forecast levels then the Pound might even be able to rally against the Euro.

Euro to Pound Prediction: Will EUR/GBP Exchange Rate Drop on Falling Confidence Levels?

The Euro (EUR) is at risk of falling against the Pound (GBP) on the coming Thursday, when a range of sentiment scores and confidence measures are due in the morning.

For the most part, these measures of expectations are expected to show a slowdown in September; lower business confidence and economic sentiment is forecast.

If all readings decline by as much as or more than expected then the Euro to Pound exchange rate could drop.

Among the issues caused by lower economic confidence are an increased risk of reduced business investment and lower consumer spending.

Could Eurozone Inflation Rate Rise Boost Weekly EUR/GBP Exchange Rate?

Beyond any potential losses from Thursday’s Eurozone confidence data, the Euro to Pound (EUR/GBP) exchange rate could recover on Friday’s inflation rate stats.

Consisting of initial estimates for September’s inflation rate movement, both the annual and quarterly readings are expected to show a faster pace of price growth.

Predictions of higher inflation are positive news for Euro traders and could boost the EUR/GBP exchange rate before the weekend.

This is because higher interest rates increase the odds of a European Central Bank (ECB) interest rate hike, especially if they breach the ECB’s ‘below 2%’ target.

The ECB is expected to raise interest rates from their current 0% in 2019 – higher inflation rates on Friday could make an early 2019 rate hike more likely.