Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Gains Despite US Dollar Strength
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.4% on Wednesday afternoon.
The Euro softened versus most of its major peers on Wednesday despite a complete absence of domestic data to provoke changes.
The depreciation can be linked to US Dollar strength as falling crude prices and global stocks volatility caused heightened demand for the safe-haven US Dollar. The Euro to US Dollar exchange rate is negatively correlated so USD strength usually coincides with EUR weakness.
European stocks are in particularly bad shape with all markets falling well over 1% in the early stages of the European session. This added to the Euro depreciation.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7904.
Since Mayor of London Boris Johnson announced he would be supporting those campaigning to leave the EU, the British Pound has been on a continuous slide versus its currency rivals.
Wednesday has seen the trend continue with the Pound expected to extend losses further. The long period of uncertainty leading up to the June 23rd referendum is very likely to cause significant GBP price swings as traders react to opinion polls.
Domestic data has printed comparatively positively thus far. January’s Loans for House Purchase was predicted to rise from 43660 to 44800, but the actual result reached 47509. The sharp rise in mortgage demand can be linked to those wishing to move house ahead of a tax increase in April.
Euro to US Dollar (EUR/USD) Conversion Rate Predicted to Decline ahead of US Services and Composite PMIs
The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.1% on Wednesday afternoon.
As mentioned above, the Euro softened versus most of its peers thanks to US Dollar strength. Also weighing on demand for the common currency is mounting speculation that the European Central Bank (ECB) will look to loosen monetary policy in March.
‘We see a case for further ECB cuts, within a tiered system, which allows for a steeping of the yield curve (for a given level of average interest rates), as a way to boost banks’ profitability, improve the availability of bank credit and stimulate economic growth,’ stated Goldman Sachs.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1020.
The US Dollar, meanwhile, has strengthened versus a number of its major peers thanks to safe-haven demand. Tanking crude oil prices and global stocks volatility has seen heightened demand for the Dollar today.
Later during the North American session there will be a number of US data publications with the potential to cause significant changes. Perhaps the most significant of which will be US Services and Composite PMIs. US crude oil inventories will also be closely monitored as a rise in stockpiles will cause crude prices to decline further and likely cause market sentiment to dampen even more.
Euro Exchange Rate Forecast: Eurozone Consumer Prices in Focus
Given the complete absence of domestic data to provoke changes, the Euro will see movement in response to market sentiment and changes in equity values. The single currency is likely to hold gains versus the Pound but could see volatility against the US Dollar with several US ecostats due this afternoon.
Thursday should see Euro volatility with German GfK Consumer Confidence and Eurozone Consumer Prices reports due for publication.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within the range of 0.7853 to 0.7925.
The Euro to US Dollar (EUR/USD) exchange rate was trending within the range of 1.0956 to 1.1046 during Wednesday’s European session.
