GBP/EUR Exchange Rate Rallies Before UK CPI, Eurozone Industrial Production Data
Following a day devoid of influential data releases for either the UK or Eurozone, the Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3846 having advanced by 0.35% on the day’s opening levels.
Souring sentiment toward Greece in light of reported comments made by Eurogroup officials were largely responsible for the GBP/EUR uptrend.
On Tuesday, the UK’s inflation report will be the main cause of GBP/EUR exchange rate movement, but investors will also be focusing on the Eurozone’s Industrial Production numbers.
Earlier…
The Pound Sterling to US Dollar (GBP/USD) exchange rate might have hit a five-year low of 1.4584 on Friday, but the Pound Sterling to Euro (GBP/EUR) exchange rate managed to remain trading at 1.38 as the Greek bailout situation kept the common currency under pressure.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: Pound Could Extend Gains if UK Inflation, Jobs Data Impresses
Although Friday’s UK Industrial/Manufacturing Production and Construction Output reports fell short of forecasts – reducing demand for the Pound – the fact that Greece was set a new deadline for presenting its creditors with revised reforms kept the GBP/EUR exchange rate trending higher.
In the days ahead the Pound Sterling to Euro (GBP/EUR) exchange rate could experience considerable movement as the UK publishes influential inflation and employment figures.
As the Bank of England (BoE) has cited an uptick in consumer prices and an improvement in wage growth as prerequisites for higher borrowing costs, these figures could have a big impact.
Should inflation advance, the level of unemployment fall or average earnings increase, the Pound may extend gains against the Euro, with the pairing potentially moving back to the 1.39 level.
Next week the European Central Bank (ECB) is also set to deliver its first policy statement since launching quantitative easing in March.
In the opinion of industry expert Nick Kounis; ‘President Draghi’s big challenge in the press conference will be to sound positive about the impact of QE and the outlook for the economy without sounding like it is going ‘too well’. He is likely to make it clear that the central bank plans to continue asset purchases to at least September 2016 and we think he is likely to successfully dismiss talk of tapering or exit. This task will become much more challenging later in the year, and certainly in 2016, as the economy continues to gain momentum.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast – UK Election to Keep Sterling under Pressure
Even if the week’s UK data does impress, and give the Pound a boost in the process, the British asset is likely to remain under pressure in the run up to the UK general election.
According to foreign exchange strategist Michael Sneyd; ‘One of the things we have been flagging is that the options market for quite some time has been pricing in a lot of uncertainty around the upcoming election. It still looks like there is plenty of scope for investors to sell Sterling ahead of the election.’
If any of the major parties appear to be pulling ahead, it could spark volatility.
Of course, the situation in Greece will continue to exert a powerful influence on currency market movement.
Should it appear that the nation is unlikely to restructure its reform proposals on time, the Euro may slide.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7235, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.4618, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6841, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3799
