UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.4% on Friday morning.
After both the Bank of England (BoE) and the Federal Reserve published dovish interest rate meeting minutes, the Pound softened versus its major rivals. With most traders confident that the BoE will not look to hike the benchmark interest rate ahead of the Fed, demand for the Pound cooled. Today’s Trade Balance data has the potential to provoke changes for the Pound, however.
Conversely, the dovish Fed minutes supported demand for the Euro. The EUR/USD is the most traded currency pairing in the world, so the softer US Dollar is naturally positive for the single currency. With an absence of domestic data today, the Euro will see movement in response to market sentiment and US Dollar positioning.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7379.
Yesterday…
EUR/GBP Commercial Exchange Rate Predicted to Strengthen despite Weak German Trade Data
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.4% on Thursday afternoon.
Now that Greek Prime Minister Alexis Tsipras has been re-elected to implement the reforms he negotiated, confidence is growing amongst Eurogroup members that the situation in the Hellenic nation will improve. Tsipras is confident that he can get Greece out of its financial crisis by 2019. This caused the shared currency to advance versus many of its currency rivals on Thursday morning. Also aiding the Euro uptrend is mounting confidence that European Central Bank (ECB) President Mario Draghi has plenty of tools at his disposal to successfully implement the expansion of quantitative easing.
However, Euro gains have been slowed somewhat after German data revealed yet more economic concerns in the Euro-area powerhouse. German trade surplus narrowed more-than-anticipated in August, with both exports and imports contracting beyond expectations. With the full impact of the Volkswagen scandal yet to be felt, many economists’ fear a huge dent to German exports which could have a significantly detrimental impact on Eurozone trade.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7365.
GBP/EUR Conversion Rate Forecast to Hold Losses ahead of BoE and ECB Minutes
The Bank of England (BoE) opted to hold the cash rate at 0.5% and the accompanying minutes were comparatively dovish. Only one policymaker opted to hike the cash rate immediately, with the other policymakers highlighted the lack of inflationary pressure as the main reason to avoid increasing the lending rate.
Thus far, the only British data to be published produced a disappointing result. The RICS House Price Balance came in at 44% in September which was well below the 55% forecast. ‘Unless the stock being sold is replenished there is a limit to how sustainable this modest improvement in market turnover will prove to be,’ Simon Rubinsohn, RICS chief economist, said. ‘As a result of the persistent supply demand imbalance, the national house price indicator continues to rise strongly which is likely to be reflected in key house price indices over coming months and into the first half of 2016,’ the trade body said in a statement.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7335 today.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Volatility Likely on Central Bank Policy Decisions
With both the BoE and ECB set to release minutes relating to interest rate decisions, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to fluctuate considerably. The Federal Reserve meeting minutes might also contribute to changes although the publications may be considered somewhat obsolete considering the rate decision was made before the string of poor US data.
Although there is a complete absence of European economic data on Friday, the EUR/GBP exchange rate is still likely to see volatility upon the release of British trade data. Market sentiment, US Dollar positioning and any news regarding ECB policy intervention will likely drive Euro movement tomorrow.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7380 today.
