- Pound Sterling exchange rates climb as UK stocks rise
- Euro exchange rates edge higher on positive domestic data
- US Dollar weakness supporting Euro demand
- EUR/GBP exchange rate forecast to hold losses ahead of US data
Euro (EUR) Exchange Rates Forecast to Tick Higher despite Mixed Data
The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.3% on Tuesday afternoon.
European ecostats produced a mixed-bag of results erring toward the positive, allowing the Euro to climb versus a number of its major peers. One of the most significant publications, the Eurozone ZEW Economic Sentiment Survey, managed to significantly rise in April from 10.6 to 21.5.
Also particularly supportive of demand for the single currency was the German ZEW Economic Sentiment Survey which significantly bettered the median market forecast rise from 4.3 to 8.0 in April, with the result actually reaching 11.2.
Responding to the positive rise in Germany’s economic sentiment, Professor Sascha Steffen of ZEW said:
‘Surprisingly positive economic news from China seem to have improved sentiment amongst financial market experts. On balance, however, the continued poor growth in China and other important emerging markets continues to be a burden for the German export industry. Furthermore, concern about Great Britain’s possible exit from the EU seems to be having a negative impact.’
However, Claus Vistesen at Pantheon Macroeconomics was more upbeat about the data, stating:
‘A surprisingly strong headline, despite the dip in the current situation index, which we can safely ignore as long as the expectations gauge continues to rise. A rise in investors inflation expectations stands out in the details—driven by the recovery in oil prices—as well as does a return to a net positive sentiment on the automobile industry.’
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7896.
Pound Sterling (GBP) Exchange Rates Forecast to Advance as UK Stocks Rally
Despite a complete absence of domestic data to provoke volatility, the UK Pound advanced versus a number of its major peers on Tuesday morning. The appreciation can be linked to UK stocks which have rallied, led by mining.
The UK asset has climbed versus its rivals over the past week or so thanks to a relief rally amid concerns of overdone depreciation. The UK asset is particularly sensitive to any developments regarding a ‘Brexit’, but traders will wish to avoid pricing-in ‘Brexit’ concerns too early.
However, the UK Pound is expected to be subject to significant price swings thanks to political uncertainty, and most analysts predict that the Pound has significantly further to drop ahead of the June 23rd referendum vote.
Economist Valeria Bednarik attributed today’s Sterling gains to a recent EU referendum opinion poll, stating;
‘An improvement in risk sentiment, as oil trimmed most of its weekly opening losses, has helped high yielders to advance this Tuesday. The GBP/USD pair trades above the 1.4300, supported by news saying that latest Brexit polls are showing a shift in favour of the ‘remain’.’
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7880.
EUR/GBP Exchange Rate Forecast to Hold Losses ahead of US Data
With a complete absence of British economic data and no further ecostats pertaining to the Eurozone, the Euro to Pound Sterling (EUR/GBP) exchange rate has a high chance of trending statically for the remainder of Tuesday’s European session.
However, there is also potential for EUR/GBP volatility in response to US Housing Starts and Building Permits data thanks to negative EUR/USD correlation.
Wednesday is likely to see significant EUR/GBP exchange rate movement with several British labour market reports due for publication, including average weekly earnings data.
Average earnings are expected to increase from 2.1% to 2.3% – a potentially Pound-supportive outcome.
The unemployment rate is predicted to remain unchanged at 5.1%.
The Euro to Pound Sterling (EUR/GBP) exchange rate reached a high of 0.7925 during Tuesday’s European session.