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Pound Sterling to Euro (GBP/EUR) Exchange Rate Drops to 1.36 after Euro Rally, UK Markit Manufacturing PMI Ahead

European Central Bank

The Pound Sterling to Euro (GBP/EUR) exchange rate began Thursday’s European trading trending lower as the Euro maintained its strength from yesterday’s rally.


Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate began Thursday trading lower after German Retail Sales figures came in above forecasts at 3.5% on the year in March; additionally; investors were anticipating favourable Eurozone inflation, German Unemployment Change and Unemployment Rate stats.

Germany’s Unemployment Change stat came in at -8K in April, rather than the -15K forecast, while the German Unemployment Rate remained stable at 6.4%.

Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate was trading lower on Wednesday after the German Consumer Price Index (CPI) printed above forecasts.

EU harmonised German inflation reached 0.3% in April on the year rather than the 0.2% predicted, up from the previous month’s 0.1%. The non-harmonised CPI reading reached 0.4% in April on the year from the former 0.3%.

Furthermore, experts forecast German inflation will continue to rise in coming months.

Market specialist Carsten Brzeski commented: ‘Looking ahead, German headline inflation should gradually continue to increase. However, as long as even the largest and strongest Eurozone economy does not show any signs of inflationary over-heating, the ECB [European Central Bank] will continue QE and hush any tapering discussion.’

Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast

The figure bodes well for Thursday’s influential Eurozone CPI stat which will be largely impacted by the largest nation within the 19-nation currency bloc, Germany.

Additionally, Thursday will see German Unemployment Change and Unemployment Rate stats published which could help to bolster the Euro to Pound Sterling (EUR/GBP) exchange rate considerably if favourable.

Meanwhile, the Pound had a bumpy day with a roller-coaster of data releases. The Nationwide UK House Price ecostat recorded 1.0% growth in April rather than the 0.2% forecast, allowing the annual figure to climb from 5.1% to 5.2%.

Nationwide chief economist Robert Gardner commented: ‘The pick-up in price growth has occurred even though the pace of activity in the housing market has remained fairly subdued in recent months.’

Amid speculation that the UK housing market had slowed, Wednesday’s figures give hope that perhaps the property sector could continue to grow at a robust pace.

Meanwhile, UK CBI Reported Sales slipped from 18 to 12 in April, rather than climbing to 25 as economists had forecast.

Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast

The Pound Sterling to Euro (GBP/EUR) exchange rate could experience major swings on Thursday with all the influential Eurozone data alone; however, the UK GfK Consumer Confidence figure will also be published and could cause moderate Pound Sterling movement.

Friday could be a more influential day for the GBP/EUR exchange rate, however, with the release of Markit’s Manufacturing Purchasing Managers Index (PMI) as well as UK Mortgage Approvals and UK Net Consumer Credit stats.

Any upbeat data could boost the Pound Sterling to Euro (GBP/EUR) exchange rate considerably as investors anticipate the possibility of an earlier-than-forecast Bank of England (BoE) interest rate hike.

The Euro to Pound Sterling (EUR/GBP) exchange rate is trending in the region of 0.7289; the Pound Sterling to Euro (GBP/EUR) exchange rate is trading at 1.3722.