GBP/EUR Conversion Rate Predicted to Tick Higher despite Slower-than-Expected UK Wage Growth
The Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.2% on Wednesday afternoon.
Despite the fact that British economic data produced a mixed-bag of results, the Pound ticked higher versus most of its currency peers. The appreciation can be linked to the fact that data was mostly positive, led by an unexpected drop in November’s Unemployment Rate from 5.2% to 5.1%. December’s Jobless Claims Change was also particularly supportive of demand for Sterling having unexpectedly declined by -4,300; bettering the median market forecast 2,800 new jobless claimants.
Sterling gains have been sluggish, however, after November’s Average Weekly Earnings failed to meet with the market consensus of 2.1% growth, with the actual result only reaching 2.0% growth. This added to concerns that the Bank of England (BoE) will look to delay a benchmark interest rate hike for a long time after Governor Mark Carney delivered a dovish speech yesterday. ‘Unemployment is now below where it was before the recession,’ Prime Minister David Cameron said on Twitter. ‘We must stick to our plan to keep delivering jobs and security for people.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3010.
EUR/GBP Conversion Rate Predicted to Tick Lower after German Producer Prices Disappointed
Although the single currency has proven remarkably resilient against global economic turmoil, disappointing domestic data and concerns regarding China have caused the Euro to tick lower versus most of its peers on Wednesday. December’s German Producer Prices contracted beyond expectations on both a monthly and annual basis. In addition, the rapid fall in oil prices and concerns regarding China’s economic slowdown have stoked fears regarding weak Eurozone trade.
The Euro depreciation has been minimal, however, with the common currency still holding a comparatively strong trade weighting. This is partly the result of pundits seeking carry trades, but is also a response to a report from the International Monetary Fund (IMF) which stated that European Union nations will actually benefit economically from the influx of migrants. ‘The negative effects of immigrant surges tend to be short-lived and temporary,’ stated IMF’s Enrica Detragiache. A positive impact ‘should be quite immediate’ thanks to the ‘fiscal expansion that’s being carried out to provide for the refugees,’ Detragiache added.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.2883 today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: ECB Rate Decision to Provoke Volatility
Given the absence of further economic data pertaining to Europe and the UK today, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold fractional gains for the remainder of Wednesday’s European session. However, Thursday is likely to see significant GBP/EUR volatility with the European Central Bank (ECB) interest rate decision dominating trader focus. December’s UK RICS House Price Balance and Eurozone Consumer Confidence data may also impact the pairing.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.3039 during Wednesday’s European session.
Comments are closed.