UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.7% on Thursday afternoon.
The shared currency appreciated fractionally on Thursday in response to mostly positive data results. In addition, easing concerns regarding Greece’s stock market saw heightened demand for the common currency. However, ongoing uncertainties regarding Greece’s attempt to secure debt restructuring in the terms of the third bailout deal has slowed the Euro’s progression.
The Pound, meanwhile, softened versus its currency rivals after the Bank of England (BoE) Monetary Policy Committee (MPC) opted to hold the cash rate at the record-low 0.5%. Whilst this was not unexpected, the market priced-in expectations of a least two dissenting policy makers arguing for an immediate hike. Only one of the nine members voted to hike rates at this juncture. The BoE also reduced their inflation expectations with commodity prices continuing to decline.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7037.
Earlier…
Euro (EUR) Exchange Rate Forecast to Hold Steady against the British Asset (GBP) despite Positive European Economic Data Results
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a narrow range on Thursday morning.
After domestic data produced mostly positive results, the single currency advanced versus many of its currency rivals. Although July’s German Construction PMI showed output slowed fractionally compared with June; German Factory Orders eclipsed market projections on both an annual and a monthly basis in June. Additionally, July’s Eurozone and German Retail PMIs bettered previous figures. The single currency uptrend has been somewhat sluggish, however, amid concerns regarding Greek geopolitics with time running out before the Hellenic nation is due to pay a large sum to the European Central Bank (ECB).
‘Boom. German industrial orders just defied any concerns about a slowdown of the economy due to the Chinese slowdown or Greek turbulence,’ said Carsten Brzeski, an economist at ING, adding that the weaker Euro was helping. ‘Today’s numbers show that the German economy could take the current positive momentum into the third quarter,’ he added.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.6979.
Pound Sterling (GBP) Exchange Rate Forecast to Trend Statically against the Single Currency (EUR) Ahead of BoE Rate Decision
Today is significant for the Bank of England (BoE) as officials’ trial a new method of releasing minutes for the interest rate decision on the same day. The BoE will also be releasing its quarterly inflation report and Governor Mark Carney will give a press conference in which he will outline economic projections. This new method has been dubbed ‘Super Thursday’ and is likely to cause significant Sterling volatility.
Thus far, British economic data has produced mixed results. The data has had minimal impact on the Pound, however, with trader focus dominated by the plethora of data releases to come from the British central bank. Halifax House Prices and UK Industrial Production failed to meet with the respective market consensuses, but Manufacturing Production bettered forecasts.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.6971 today.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Soften on Hawkish BoE
Given that many analysts forecast hawkish sentiment from BoE policy makers, with most expecting at least one dissenting Monetary Policy Committee (MPC) member, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to soften considerably. What’s more, if Governor Mark Carney hints towards a rate hike occurring in the near future, the common currency could decline as traders weigh widening policy divergence between major central banks.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7003 during Thursday’s European session.