Pound Sterling to Euro (GBP/EUR) Exchange Rate Still Trending above 1.38 ahead of Inflation Data
The Pound Sterling to Euro (GBP/EUR) exchange rate achieved another seven-year high on Thursday as the European Central Bank (ECB) indicated that the quantitative easing programme being rolled out next week could extend beyond the initial deadline of September 2016.
The GBP/EUR pairing continued trading beyond 1.38 on Friday despite Germany’s industrial production figure exceeding estimates. Industrial production in the nation was shown to have increased by 0.6% on the month and 0.9% on the year, beating forecasts for figures of 0.5% and -0.2%.
In the hours ahead further movement could be caused by the UK’s BoE/GfK Inflation projection and the Eurozone’s fourth quarter growth data.
Earlier…
GBP/EUR Exchange Rate News: German Factory Orders Fall, Euro Softens
Prior to the Bank of England’s (BoE) interest rate announcement, the Pound Sterling to Euro exchange rate was trading in the region of 1.3789.
The pairing had previously climbed above the 1.38 level as mixed economic reports from the Eurozone wore on the Euro.
Early in the European session, Germany released its Factory Orders report for January. A month-on-month decline of -1.0% had been expected, but orders actually dropped by -3.9%, taking the annual figure from a positively revised 3.9% to -0.1%.
This data was followed by Construction and Retail PMI’s for Germany, Italy, France and the Eurozone as a whole.
The Pound Sterling to Euro (GBP/EUR) exchange rate achieved a high of 1.3836
The German construction measure rallied from 49.5 to 53.1, pushing back above the 50 mark separating growth from contraction. However, the nation’s retail index slipped from 52.3 to 51.5, dragging the gauge for the Eurozone as a whole further into contraction territory in the process.
Euro movement was a little limited ahead of the European Central Bank’s (ECB) interest rate decision, but the common currency was trending in a softer position against the Australian Dollar (EUR/AUD), Canadian Dollar (EUR/CAD), Indian Rupee (EUR/INR) and US Dollar (EUR/USD).
GBP/EUR at 7-Year High: BoE, ECB Leave Interest Rates on Hold, ECB Raises Growth Forecasts
As expected by economists, both the BoE and ECB left interest rates on hold following Thursday’s policy meetings.
The Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.3726
The BoE announcement had little impact on the Pound, but the Euro did fluctuate after ECB President Mario Draghi delivered a policy statement following the decision.
Draghi asserted that the pace of growth in the Eurozone will rise to 2.1% by 2017, but that inflation would remain in low or negative territory until the end of this year.
The ECB also outlined the parameters of its QE plan.
Draghi stated; ‘We will on 9th March 2015 start purchasing Euro-dominated public sector securities in the secondary market. We will also continue to purchase asset-backed securities and covered bonds which we started last year.’
The GBP/EUR pairing gained by over 0.3% following the announcement to trend in the region of 1.3823.
According to Howard Archer of IHS Global Insight; ‘With the ECB now markedly more upbeat on Eurozone growth prospects and consumer price inflation seen being back in line with its target rate by 2017, it may seem questionable whether the ECB will feel that it needs to continue its QE program through to the currently planned finish date of September 2016. Let alone possibly extend it thereafter.’
He continued; ‘Significantly though, the ECB indicated that its growth and inflation forecasts are based on the expected full implementation of the QE program, while ECB President Mario Draghi also commented that the ECB “see no reason to think, plan, or act, in any different way than what we planned.” The ECB also stressed that the uncertainty surrounding the forecasts increased the further out that they went.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Eurozone Growth, UK Inflation Data Ahead
The Pound Sterling to Euro (GBP/EUR) exchange rate could experience additional movement before the weekend as a result of the Eurozone’s fourth quarter growth data and German Industrial Production numbers.
The UK will also be publishing the BoE GfK Inflation Projection for the next 12 months.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trading in the region of 0.7239. The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5234 The US Dollar to Pound Sterling (USD/GBP) exchange rate is trading in the region of 0.6559. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3811