Pound (GBP) Softens in Anticipation of UK’s Autumn Statement and Fresh Austerity Measures Today
Ahead of the UK’s BBA Loans for House Purchase and George Osborne’s Autumn Statement the Pound (GBP) has been on a downtrend, as investors brace for the announcement of further austerity measures. As geopolitical tensions have flared between Turkey and Russia, meanwhile, the Euro (EUR) has been bolstered by fresh safe-haven demand. Consequently the GBP/EUR exchange rate was trending in the region of 1.4147 on Wednesday morning.
Earlier…
As sentiment towards Pound Sterling (GBP) remains dampened ahead of Wednesday’s Autumn Statement from George Osborne, the GBP/EUR exchange rate slump has continued, with the Pound held down by fresh Euro (EUR) strength today.
German PMIs Bettered Forecasts to set GBP/EUR Exchange Rate Trending Lower
Things have begun to look up for the Euro (EUR) somewhat this week, as stronger-than-expected Eurozone data outweighed the dovishness of recent comments from European Central Bank (ECB) policymakers. Both the German Manufacturing and Services PMIs printed at higher levels than forecast, with the domestic service industry in particular demonstrating solid growth on the month in November. The single currency was also bolstered by the confirmation that Greece had satisfied the conditions to secure its latest 2 billion Euro tranche of bailout funds, lifting some weight from the minds of investors.
Following Friday’s disappointing UK Public Sector Net Borrowing report for October the Pound (GBP) remained on relatively sluggish form at the start of the week. As expectations are for this week’s Autumn Statement from Chancellor George Osborne to unveil a fresh raft of harsh austerity measures, traders appear to have little inclination to buy into Sterling presently.
Euro Currency News: EUR Shored Up Today as IFO Business Sentiment Survey Reaches Seventeen-Month Best
Although the third quarter German GDP was confirmed to have slowed somewhat today, with quarterly growth at a rather discouraging 0.3%, this failed to particularly hold down the single currency on Tuesday morning. While imports and domestic spending within the Eurozone’s powerhouse economy were shown to have risen in the third quarter, this was outweighed by a sizable slump in German exports.
Nevertheless, the latest IFO business surveys have helped to bolster demand for the Euro this morning. Bettering expectations, the Business Climate, Current Assessment and Expectations indexes all advanced on the month in November as the wider impact of the Volkswagen emissions scandal has proved rather more limited than feared. In particular, the business climate index rose to a surprisingly bullish seventeen-month high as domestic sentiment strengthened in spite of a number of adverse developments within the wider Eurozone and global economies. Consequently the GBP/EUR exchange rate has continued to downtrend today, despite the persistent likelihood of imminent ECB monetary loosening.
GBP/EUR Exchange Rate Forecast: BoE Comments Predicted to Provoke Pound Volatility
A rally could be in store for the Pound later in the morning, however, as Bank of England (BoE) Governor Mark Carney will be speaking to the UK Treasury Committee. Carney is expected to shed further light on his recent assessments of the domestic economy, potentially offering some greater suggestion as to the timing of the central bank’s first move on interest rates. Should the policymaker prove more hawkish, this could spur an increased demand for Sterling, in spite of market trepidation ahead of tomorrow’s Autumn Statement.
Later in the week the Euro may soften on the back of the latest German GfK Consumer Confidence Survey, which is predicted to show a slight decrease in optimism on the month. Should this afternoon’s raft of US data, in particular the third quarter GDP, offer further support to the odds of the Fed raising interest rates before the end of the year the common currency could also see a decline.
Current GBP, EUR Exchange Rates
At time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was slumped in the region of 1.4192, while the Euro to Pound Sterling (EUR/GBP) pairing made gains in the range of 0.7047.