GBP/EUR Conversion Rate Predicted to Edge Lower on Referendum Concerns
The Pound Sterling to Euro (GBP/EUR) exchange rate ticked fractionally lower on Tuesday by around -0.2%.
With a complete absence of British economic data to provoke volatility, the Pound depreciated as traders look ahead to the referendum on the UK’s membership in the European Union. Many traders are concerned that the potential for a massive shift in policy will dampen foreign investment and could see many international corporations move away from London. Britain leaving the European Union ‘is a lose-lose,’ that ‘could delay any hike from the Bank of England,’ said Vincent Chaigneau, global head of rates and foreign-exchange strategy at Societe Generale SA in London. ‘In this context there is scope for short-term rate differentials to widen to push cable to the downside,’ he said, referring to the Pound versus the Dollar.
Also weighing on demand for the British asset is the current chaos caused by flooding. The additional cost for repair and new measures to prevent further flooding is likely to have a significantly detrimental impact on Chancellor George Osbourne’s budget. What’s more, there is the potential for further chaos with Storm Frank due to hit the British Isles tonight. BBC weather presenter Sarah Keith-Lucas said: ‘The wind and the rain will strengthen during the course of Tuesday, all down to Storm Frank. That’s going to be pushing toward the north of the UK but Tuesday night into Wednesday a trailing weather front will be quite a troublemaker, bringing not only destructive winds but also further heavy rain.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3543.
EUR/GBP Conversion Rate Predicted to Hold Gains ahead of US Data
With a complete absence of European economic data, the single currency was trending within a limited range versus a number of its major peers. Having weakened considerably during the third-quarter in response to speculation that the European Central Bank (ECB) would ease monetary policy significantly in December, the Euro continues to trend higher after the ECB eased policy much less-than-anticipated.
Given Euro to US Dollar (EUR/USD) exchange rate negative correlation, today’s US data has the potential to provoke changes for the common currency. November’s US Advance Goods Trade Balance, October’s S&P/Case-Schiller Composite-20 and December’s Consumer Confidence data will all be likely to provoke market volatility, especially during this period of thin trading volume.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3512 during Tuesday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate: Volatility Forecast on UK Nationwide House Prices Data
As explained above, thin trading volumes and negative EUR/USD correlation may cause Pound to Euro (GBP/EUR) exchange rate volatility today once US data has been released. Looking further ahead to tomorrow, however, there will be several data publications with the potential to provoke GBP/EUR changes. The UK’s Nationwide House Prices data for December is likely to have the greatest impact on the pairing. November’s Eurozone M3 will also be of interest to those invested in the GBP/EUR conversion rate. Additionally, US MBA Mortgage Applications and Pending Homes Sales will be likely to encourage market volatility tomorrow.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3600 during Tuesday’s European session.
