UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.2% on Tuesday morning.
After German inflation data met with expectations, the Euro strengthened versus its major peers. September’s German Consumer Price Index held at 0.0% on the year. This is positive because many feared that if German inflation dropped into negative territory the European Central Bank (ECB) would respond swiftly by expanding quantitative easing.
The Pound also advanced versus many of its currency competitors on Tuesday morning as traders await British inflation data. September’s BRC Like-for-Like Sales advanced by 2.6%; well above the 1.5% growth in sales forecast. Should British Consumer Prices advance beyond the 0.0% predicted the Pound is likely to rally, especially given that the Bank of England (BoE) highlighted the absence of inflationary pressure as an obstacle preventing a benchmark rate hike.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7420.
Yesterday…
EUR/GBP Conversion Rate Predicted to Soften ahead of Fed Speeches
The Euro to Pound Sterling (EUR/GBP) exchange rate ticked lower by around -0.1% on Monday afternoon.
With a distinct lack of economic data to provoke changes for the common currency, Euro trade is likely to be comparatively subdued during Monday’s European session. French and Italian yield data is unlikely to have a significant impact on shared currency movement. Later during the North American session there will be several speeches from Federal Reserve officials regarding policy outlook. Should the speeches prove hawkish, the Euro is likely to decline as traders push forward bets regarding the timing of a Fed benchmark rate hike.
Although European economic data produced mixed results erring towards negativity last week, the single currency appreciated thanks to US Dollar weakness. Negative correlation could see the Euro maintain a high value this week, although fears regarding European Central Bank intervention will likely anchor gains. With a complete absence of price pressures in the Eurozone, the ECB will likely consider expanding the quantitative easing program in the hope of provoking inflationary pressure.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7407.
GBP/EUR Exchange Rate Forecast to Strengthen on Delayed BoE Bets
After last week showed that the Federal Reserve was certainly in no hurry to tighten monetary policy, the Pound has seen reduced demand. This is because most economists agree that Bank of England (BoE) policymakers will be very unlikely to vote for a benchmark rate hike ahead of the Federal Reserve. After the International Monetary Fund (IMF) reduced global growth forecasts, many traders concluded that the Fed will delay a lift-off into 2016 in order to gauge the state of global economic affairs. Uncertainty is the enemy of policymakers.
With a complete absence of British economic data to provoke volatility, the Pound is likely to see quiet trade on Monday. A very slight uptrend can be linked to the Shanghai Composite Index which ended the Asian session 3.3% higher. That is positive for the UK as Chancellor George Osborne is attempting to merge China’s equity market with the UK’s. The forthcoming Fed officials’ speeches may initiate Sterling changes. Certainly any particularly hawkish remarks will be fodder for rate hawks hoping that the BoE will lift rates in the first-half of 2016.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7401 during the early stages of Monday’s European session.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Will UK Inflation Improve?
As mentioned above, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to trend within a limited range thanks to an absence of influential domestic data, although some moderate fluctuation may be seen in response to speeches from Federal Reserve officials.
Tuesday is likely to see greater EUR/GBP volatility with several data publications pertaining to both the UK and Europe. Trade focus will be dominated by British inflation data. If September’s Consumer Price Index moves away from the flat-line 0.0%, the Pound is likely to strengthen considerably. Although Bank of England Governor Mark Carney expressed the view that low inflation is transient, a drop into negative territory will be a serious blow for rate hawks.
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced to a high of 0.7423 during Monday’s European session.