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Pound to Euro Exchange Rate Forecast: Will UK GDP Growth Lead to GBP/EUR Gains?

European Central Bank

Chance for Pound Sterling to Euro (GBP/EUR) Exchange Rate Rise on Next Week’s GDP Stats

The Pound (GBP) has held close to opening levels against the Euro (EUR) today, facing Brexit-related headwinds in the pairing.

This limited movement has been caused by continuing concerns about whether the UK will be able to meet the EU’s deadlines for finishing Brexit negotiations.

Despite supportive remarks from a number of EU officials, signs still point towards talks being stalled because of significant differences between UK and EU negotiators.

Outside of any Brexit-linked movement, the Pound could next be affected by Monday’s GDP reading for July which might boost the GBP/EUR exchange rate.

The monthly GDP figure is predicted to rise from 0.1% to 0.3%; while a small increase, this would still be good news for GBP traders.

July was one of the UK’s heated summer months, so faster economic growth because of increased tourist activity is to be expected.

If the GDP reading rises as expected or by even more than forecast then the Pound could rise sharply against the Euro.

Euro to Pound Sterling (EUR/GBP) Exchange Rate could Decline on Eurozone Confidence Data

The Euro (EUR) is at risk of declining against the Pound (GBP) in the week ahead, when high-impact Eurozone-wide economic confidence data comes out on Tuesday.

The morning’s ZEW survey of economic confidence in the Eurozone during September is predicted to fall from -11.1 points to -14.9.

Additional disappointment could be caused by the German reading for current conditions, which is predicted to drop from 72.6 points to 72.1.

Although the ZEW German economic sentiment index is predicted to shift from -13.7 points to -13, such a result might not be enough to have a positive effect on the Euro.

Lower levels of economic confidence can lead to widespread problems, including lower business investment and ultimately falling levels of GDP.

EUR/GBP Forecast: Will ECB Meeting Bring Euro to Pound Exchange Rate Rise?

Like the UK, there will be a high-impact central bank meeting taking place in the Eurozone next week.

In the Eurozone’s case, this will be the European Central Bank (ECB) meeting on Thursday afternoon, which will include an interest rate decision and press conference.

In the former case, ECB policymakers aren’t expected to adjust interest rates from their current 0%; the next rate hike is being pencilled in for some time in 2019.

The press conference might cause more significant EUR movement, when ECB President Mario Draghi gives a speech and answers questions about monetary policy.

Mr Draghi’s remarks often have a significant impact on the Euro’s value, so if he gives an optimistic economic forecast then the EUR/GBP exchange rate could rise.

Euro traders are looking for any signs that a 2019 interest rate hike could come sooner rather than later, as the ECB rate has remained at 0% since 2016.