UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.29% on Monday morning.
With a complete absence of domestic data to curb the trend; the Pound softened versus most of its major peers as political uncertainties weigh on investor confidence as we approach the general election.
The Euro, meanwhile, softened versus the vast majority of its most traded currency competitors. This can be attributed to ongoing concern that Greece will default on loan repayments and fail to produce acceptable reforms by the April 24th deadline.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3880.
At the close of last week, the Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.34%.
After Friday’s British labour market data printed positively, the Pound strengthened versus many of its most traded currency competitors. The Sterling advance is unlikely to be sustained, however, with the general election fast approaching. Given that opinion polls have failed to show a majority, and with varied results depending on the polls originator, political uncertainties are weighing heavily on demand for the Pound.
The Euro, meanwhile, fluctuated versus many of its major peers on Friday despite domestic data meeting with median market forecast figures. This can be attributed to mounting speculation that Athens will fail to produce acceptable reforms by the April 24th deadline.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3910 towards the end of Friday’s European session.
Pound Sterling (GBP) Exchange Rate Forecast to Trend Lower on Political Uncertainty
With the general election looming, political uncertainties are likely to weigh on demand for the Pound. That is not to say that data won’t be important, however, with many speculating that the Bank of England (BoE) will move to raising the benchmark interest rate after the general election concludes.
One publication that is guaranteed to spark volatility is minutes from the most recent BoE Monetary Policy Committee (MPC) meeting. Should the minutes contain hawkish references to rate increases the Pound is likely to strengthen.
In addition to the BoE minutes; Rightmove House Prices, Public Finances, Public Sector Net Borrowing, PSNB ex Banking Groups, Retail Sales and Retail Sales including Auto will be of interest to those invested in the British asset.
Euro (EUR) Exchange Rate Forecast to Soften on Geopolitics
Given that the situation in Greece is far from abating, geopolitics is likely to dominate trader focus over the coming week. With Athens set to produce reforms before the April 24th deadline; many are speculating that they will fail to please Eurozone officials.
There is still potential for movement from domestic data, however. Of particular significance will be the German ZEW Economic Sentiment Survey which hit 54.8 previously. In addition to German economic sentiment; German ZEW Current Situation Survey, Eurozone ZEW Economic sentiment Survey, Eurozone Consumer Confidence, German Manufacturing PMI, German Services PMI, German Composite PMI, Eurozone Manufacturing PMl, Eurozone Services PMI, Eurozone Composite PMI, German IFO Business Climate, German IFO Current Assessment and German IFO Expectations will be of interest to those invested in the single currency.
In addition to geopolitics in Greece, the European Central Bank’s (ECB) quantitative easing program may also have an impact on Euro movement; not least if an ECB official makes a speech.
The Pound is unlikely to sustain any gains ahead of the general election, but positive data results will still pressure the BoE into raising rates.
No matter how positively European data prints, the Euro is unlikely to sustain any gains until more is known about Greece’s likelihood of producing acceptable reforms.
At the close of last week, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3846 to 1.3946.