Pound to Euro Exchange Rate Forecast: This week has started well for the Pound

This week has started well for the Pound, improving by over half a cent on Monday morning in response to the German IFO Business Climate figure falling to a 2.5-year low of 101.4.

This week has started well for the Pound, improving by over half a cent on Monday morning in response to the German IFO Business Climate figure falling to a 2.5-year low of 101.4.

Foreign Currency Market Update – GBP / EUR Update

Over the past week the Pound has made a series of slow, but steady, gains against the Euro as the EUphoria surrounding the European Central Bank’s bond-buying programme cooled down slightly.

Last week began slowly, with a slight improvement in UK House Prices the only economic release of note on Monday. The Pound’s momentum from the previous week sent Sterling higher against the single currency by half a cent and GBP/EUR improved by the same amount on Tuesday as investors looked to benefit from profit-taking stances following the Euro’s recent strong performance. The headline UK inflation Consumer Price Index figure decreased from 2.6% to 2.5% in August, however the mild decline fell in-line with analysts’ expectations and did little to harm the Pound.

On Wednesday the Bank of England released the minutes report from their September meeting which revealed that the 9 monetary policy committee members voted unanimously against modifying the current record low benchmark interest rate of 0.50%. The MPC also agreed that the asset purchasing target should remain at £375 billion for the time being, but the report suggested that more quantitative easing measures could be possible in the near-future. The current round of asset purchases expire in November and the BoE are expected to announce a further £50 billion of QE around this time, but an interest rate cut remains extremely unlikely given its perceived derogatory affect on the UK economy.

Through Wednesday GBP/EUR remained relatively stable but the Pound really picked up the pace on Thursday, improving by over 0.7 cents to consolidate above 1.2500 as UK Retail Sales performed slightly better-than-expected and the Composite Eurozone PMI fell to a 3-year low. The weak Eurozone figures suggested that the ECB’s bond-buying proposal had not had the desired effect on business confidence and this improved the likelihood of an interest rate cut in the 17-nation bloc.

On Friday issues surrounding the release of Greece’s next aid tranche hurt Euro sentiment but speculation surrounding a plea for financial assistance from Spain repaired the damage and left markets suitably bamboozled.

This week has started well for the Pound, improving by over half a cent on Monday morning in response to the German IFO Business Climate figure falling to a 2.5-year low of 101.4.

Looking ahead this week and the German CPI headline inflation figure is expected to drop slightly – something that will please the inflation-anxious Bundesbank – the German Unemployment Rate is predicted to maintain its current level of 6.8%, and the UK second quarter growth figure is expected to be confirmed at -0.5%. In the absence of any market-moving ecostats the spotlight is likely to fall on the 2013 Spanish Budget released on Thursday.

The Spanish Budget is expected to detail a further round of fiscal austerity measures as a precursor for financial assistance from the ECB in the form of purchases of Spanish short-term debt . If this proves to be the case then it is entirely possible that we could see the Euro appreciate against Sterling as markets anticipate a more stable sovereign debt market.

However, the longer investors are made to wait the more disilusioned they will become. If ECB intervention in the debt market is not forthcoming, because Spain do not make the sufficient request for assistance, then the Euro could be set to slide further against the Pound.

Heads Up

Summary of major upcoming data releases that we think may move the market.

 

 

 

Related posts:

  1. Pound to South African Rand Exchange Rate Forecast: The Rand started the week in go-ahead mood
  2. Pound to Euro Exchange Rate Forecast: The Pound to Euro exchange rate started last week at a three-and-a-half year high
  3. Pound to Euro Exchange Rate Forecast: The Pound has declined by around 1.5 cents against the Euro, reaching a 3-month low of 1.2325 in the process
  4. Pound to Euro Exchange Rate Forecast: The Pound slipped below 1.2500 for the first time in over 2 months
  5. Pound to Euro Exchange Rate Forecast: The Pound to Euro exchange rate reached a 10-day high of 1.2774

Article source: http://feedproxy.google.com/~r/ForeignExchangeOutlook/~3/bH-MhaRjJeI/

Leave a Reply

WP2Social Auto Publish Powered By : XYZScripts.com
Bunk Beds