Pound Sterling to Euro (GBP/EUR) Exchange Rate News: Pound Weaker against Euro, Holding Steady against US Dollar
Ahead of the publication of the UK’s latest batch of inflation data, the Pound Sterling to Euro (GBP/EUR) exchange rate fell by 0.3% to trade in the region of 1.36.
The Euro was able to gain on its British rival as Markit Manufacturing/Services PMI’s for the Eurozone and its largest economy beat forecasts.
Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within touching distance of the key support level of 1.50 as economists bet that today’s US inflation data will support the case in favour of the Fed leaving interest rate increases on hold for the rest of 2015.
Earlier…
Both the Pound Sterling to Euro (GBP/EUR) exchange rate and Pound Sterling to US Dollar (GBP/USD) exchange rate closed out the week lower than they began as the Pound’s 2015 charge appeared to run out of steam.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: BoE Rate Hike Bets Weaken Pound, Euro Buoyed by Greek Developments
After previously dropping from a high of 1.42, the Pound Sterling to Euro (GBP/EUR) exchange rate fell from 1.40 to 1.37 this week as Sterling continued to be beaten back from its recent run of 7-year highs.
The British currency’s downtrend was aided by below-forecast UK average earnings figures and the hint in the Bank of England’s meeting (BoE) minutes that the strength of the domestic currency could prevent interest rates from climbing.
The Euro, meanwhile, was able to advance as Greece finally appeared to be making some headway with its creditors.
Following a crunch meeting with Eurozone heads, the Hellenic nation has vowed to draft and present a reform plan within the next few days.
Greek Prime Minister Alexis Tsipras said of the discussion; ‘I’m more optimistic after this deliberation. I think that all the sides confirmed their intention to try and do their best to overcome the difficulties of the Greek economy as soon as possible.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: FOMC Announcement Bolsters USD, Pound Punished after Haldane Comments
The Pound Sterling to US Dollar (GBP/USD) exchange rate weakened to a 5-year low as the diverging outlooks of the Bank of England (BoE) and Federal Reserve pushed the pairing further below technical support of 1.50.
As expected by some economists, the Federal Open Market Committee removed the word ‘patience’ from its interest rate commentary – clearing the path for an adjustment in borrowing costs taking place in June.
Although the central bank and its chief Janet Yellen maintained a largely dovish stance, the fact that the BoE’s head economist asserted that a UK rate cut was as likely as a rate rise ensured that the GBP/USD pairing remained on the back foot for the second half of the week.
Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar Exchange Rate Forecast: UK and US Inflation Reports Influential, Greece in Focus
Next week we can expect another spate of GBP/EUR, GBP/USD exchange rate volatility as the UK, US and Eurozone all publish a number of influential economic reports.
The UK’s inflation data is likely to be crucial in terms of dictating the Pound’s performance as the Bank of England has implied that rates will remain on hold if the inflation outlook worsens.
A drop in consumer price gains, or a move into negative territory, would therefore be Sterling-negative. If the numbers disappoint, the divergence between the BoE and Fed will widen and the Pound could potentially slide to 1.36 against the Euro and 1.45 against the US Dollar.
Conversely, an uptick in CPI would give the BoE more impetuous to raise borrowing costs and may boost the Pound on Tuesday. The UK’s retail sales report will also be of interest.
Meanwhile, developments in the Greek situation will continue to impact the GBP/EUR pairing. If Greece presents a list of reforms which its creditors approve, the Euro’s rally may continue. Markit’s Manufacturing/Services/Composite PMIs for the Eurozone will also be of interest as improvements in output in the region’s largest economies tend to lend the Euro support.
The direction taken by the Pound Sterling to US Dollar (GBP/USD) currency pair may be dictated by the US Consumer Price Index, also due out on Tuesday. In its recent announcement, the FOMC asserted that inflation would have to move closer to target before borrowing costs can be adjusted. Simply put, a slide in inflation would push back Fed rate hike bets and weaken the ‘Greenback’ while acceleration would support the case for a June rate hike and push the US Dollar higher still.
At the close of the week the Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7252, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.4784, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6761, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3784.
Investors with an interest in the GBP/EUR pairing will also be looking to the Eurozone’s Consumer Confidence Index and Germany’s GfK sentiment gauge.
Improved sentiment in the currency bloc could give the common currency a lift and similarly, the GBP/USD pairing is also likely to experience movement as a result of the US Durable Goods Orders report. The rebound in orders is expected to continue in February.