The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a narrow range on Wednesday morning.
As traders await the European Central Bank (ECB) rate decision, in which most agree that the cash rate will be unchanged, the single currency edged lower versus many of its most traded currency competitors. The declination can be attributed to ongoing fears that Greece will default on loan payments and be forced to leave the Eurozone.
The Pound, meanwhile, ticked lower versus many of its most traded currency rivals thanks to ongoing political uncertainties as we draw ever closer to the general election. With a complete absence of domestic data to curb the trend, Sterling could possibly continue to trend lower over the course of Wednesday’s European session.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7198.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate ticked higher by around 0.18% on Tuesday afternoon.
Although the relationship between Greece and Eurozone officials seems close to breaking point, the single currency strengthened fractionally on Tuesday. This is as a result of the European Central Bank (ECB) indicating that quantitative easing has allowed European banks to lend more. Additional appreciation can be attributed to a report from the International Monetary Fund (IMF) which stated that the strength of the US Dollar was positive for Eurozone growth.
The Pound, meanwhile, fluctuated versus its major peers in response to mixed results from domestic data. A slight depreciation can be linked to ongoing political uncertainty as we draw ever closer to the general election. Fears of a major policy overhaul have stymied investor confidence.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7219.
Euro (EUR) Exchange Rate Edges Higher on ECB Bank Lending Survey
With the geopolitical tensions in Europe far from abating, the single currency has struggled to make any meaningful gains over the past few months. However, Tuesday has seen a fractional Euro recovery thanks to a report from the ECB stating that quantitative easing was having a positive effect on bank’s willingness to lend.
‘There have been substantial improvements in the level of credit standards compared with banks’ indications one year ago,’ the ECB said in its report.
Also aiding the common currency uptrend was a report from the IMF which stated that the strength of the US Dollar was positive for the Eurozone, as the weak Euro is fuelling the region’s economic recovery. ‘The Eurozone economy is projected to grow by 1.5% this year and 1.6% in 2016,’ stated the report.
The Euro to Pound Sterling (EUR/GBP) exchange rate has fallen to a low of 0.7179 today.
Pound Sterling (GBP) Exchange Rate Fluctuates on Mixed Data
With the impending general election fast-approaching, the Pound has struggled to sustain any significant advance. Given that many are describing the election as the most closely contested in modern political history, it is perhaps unsurprising that investors lack confidence amid anxieties of a substantial policy overhaul. Furthermore, with several parties offering a referendum on Britain’s membership in the European Union, the potential fallout from such an event is amplifying trader reluctance to invest.
Mixed domestic data results on Tuesday have caused the Pound to fluctuate versus its most traded currency rivals, with much of Sterling movement dictated by quote currencies. BRC yearly Like-for-Like Sales increased by 3.2% in March, eclipsing the median market forecast growth of 0.5%. Also, March’s Consumer Price Index held at 0.0% on the year; avoiding moving into deflation territory. However, March’s Core CPI failed to meet with the market consensus of 1.2%, with the actual result dipping to 1.0%.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Gains
Although geopolitics in Europe continues to hinder investor confidence, the Euro to Pound Sterling (EUR/GBP) exchange rate should hold gains thanks to the positive ECB and IMF reports. Additionally, the disappointing core inflation data is likely to weigh on demand for the British asset.
Wednesday will be significant for the EUR/GBP pairing with the ECB rate decision and accompanying report due for release. An absence of British data could see investors revert to domestic politics as the driving force behind Sterling volatility.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7132 today.
