UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a limited range on Wednesday morning.
After British services output declined beyond expectations, the Pound softened versus many of its peers. Although December’s Construction PMI bettered estimates, the combination of weak manufacturing and services growth caused the UK Composite PMI to decline.
The Euro, meanwhile, is holding a weak position versus ts peers thanks to mixed data results and US Dollar strength. After Eurozone inflation dropped unexpectedly, speculation regarding the likelihood of European Central Bank (ECB) intervention is weighing heavily on Euro demand. The EUR/GBP exchange rate is likely to see changes in response to US data thanks to EUR/USD negative correlation.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7327.
Yesterday…
EUR/GBP Conversion Rate Predicted to Decline amid Speculation of ECB Intervention
The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.5% on Tuesday afternoon.
After yesterday’s German inflation data showed consumer prices declined unexpectedly in December, many analysts predicted that the Eurozone inflation data for December would also fail to meet with expectations. These predictions transpired to be correct, with December’s Eurozone Consumer Price Index coming in at 0.2% which was below the market consensus of 0.4%. Core Eurozone Consumer Prices also stagnated at 0.9% on the year in December despite the median market forecast rise to 1.0%.
‘Good news for Eurozone consumers but a headache for the European Central Bank (ECB) as consumer price inflation remained down at 0.2% in December, thereby defying expectations of a small uptick. The failure of Eurozone inflation to pick up in December is good news for consumers’ purchasing power; but it will maintain ECB concern that prolonged very low inflation could lead to a renewed weakening in inflation expectations thereby making it harder still to get Eurozone consumer price inflation up to its target rate of close to 2%,’ stated Howard Archer of IHS Global Insight.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7321.
GBP/EUR Conversion Rate Predicted to Edge Higher after UK Construction Bettered Expectations
In response to better-than-anticipated British economic data the Pound edged higher versus the single currency. The British asset is fluctuating versus its major peers today, however, amid concern that holiday retail sales have not met with economists’ forecasts after Next released disappointing sales figures. December’s UK Construction PMI was predicted to advance from 55.3 to 56, but the actual result reached 57.8. This eased some concerns regarding the poor rate of sectoral growth in the fourth-quarter of 2015.
Commenting on the report, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: ‘With both new orders and general business activity on the rise, this month saw a considerable spike in purchasing activity and the second fastest increase since January 2015, amidst an environment where suppliers struggled more as lead times lengthened.’
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low today of 0.7310 during Tuesday’s European session.
Euro to Pound Sterling Forecast: UK House Prices to Provoke Volatility
With a complete absence of further economic data pertaining to both Europe and the UK, the Euro to Pound Sterling exchange rate is likely to hold losses for the remainder of Tuesday’s European session. There is the potential for movement in response to US data but said US ecostats are not considered of huge significance in terms of market moving potential.
Wednesday is likely to see EUR/GBP movement in response to UK house prices data and the composite and services PMIs. European economic data, which includes German and Eurozone composite and services PMIs also has the potential to provoke EUR/GBP volatility on Wednesday.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7364 during Tuesday’s European session.
