UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.4% on Thursday afternoon.
Although German inflation data bettered estimates, with preliminary consumer prices rising to 0.5% on the year in January, the EUR/GBP exchange rate is still holding losses. This is likely due to Sterling tracking oil prices.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7626.
Earlier…
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Decline ahead of German Inflation Data
The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.6% on Thursday morning.
In response to a number of disappointing domestic ecostats, the Euro declined versus nearly all of its major peers. In January Eurozone Economic Confidence, Industrial Confidence, Services Confidence and the Eurozone Business Climate Indicator all declined beyond the respective market consensuses. At 105.0, January’s Eurozone Economic Confidence is the lowest in five months. Despite this drop in confidence, which is likely a response to global financial market turbulence, receding unemployment is predicted to boost consumer outlook.
‘The drop in the oil price has clearly boosted household real disposable income,’ Neville Hill, an economist at Credit Suisse Group AG in London, said before the report. ‘Employment growth is strong and positive, and unemployment is falling, and at the same time financial conditions are clearly easing.’
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7612.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Rally after UK GDP Met with Forecasts
On Thursday morning the British Pound reversed recent losses after domestic data met with the median market consensus. On the year, fourth-quarter UK Gross Domestic Product met with projections of 1.9% growth. On a quarterly basis, fourth-quarter GDP equalled estimates of 0.5% growth. However, several analysts have warned that the figures are solely based on services growth, with most sectors having declined in the fourth-quarter.
Ben Brettell, senior economist at Hargreaves Lansdown commented: ‘The bigger picture is that growth remains lacklustre, but reasonably resilient. A slowdown in emerging markets combined with increased uncertainty in global financial markets was bound to weigh on growth, but the domestic economy remains in reasonable health despite these headwinds.
‘It’s important to remember this is only the first estimate of GDP – based on less than half of the data which will ultimately be available. Revisions to today’s figures are likely in the coming months. Looking forward, the low oil price should continue to aid the domestic consumer, but neither wage growth nor inflation look anywhere near strong enough for the Bank of England to consider higher interest rates. 2016 looks set to be another year of the “Goldilocks economy”.’
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7598 during Thursday’s European session.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: German Inflation Data to Provoke Volatility
Whilst the disappointing Eurozone confidence reports have dragged on Euro demand, there is potential for a swift recovery to the Euro to Pound Sterling (EUR/GBP) exchange rate if German Consumer Prices better estimates. Weak Euro-area inflation has been the biggest contributor to speculation that the European Central Bank (ECB) will look to expand stimulus in March.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7663 today.
