Bullish Pound to Euro (GBP/EUR) Exchange Rate Trading Down; Influential Week Forecast
Tuesday has seen a disappointing day for UK statistics whilst the Eurozone has produced some favourable data.
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However both currencies await highly influential results on Thursday; the GBP/EUR currency pair is currently trading at 1.2581, reaching highs on Tuesday of 1.2620.
The Eurozone released German Trade Balance data for May on Tuesday showing a rise to 18.8B from the former 17.2B in April, despite a predicted flop to 16.2B. However, disappointing, yet less influential, German Current Account, Export and Import data all were published lower than expected.
Alternatively the Pound has also seen an unsatisfactory start to the day on Tuesday with unfavourable Industrial Production figures.
Data published shows that YoY May’s Industrial Production fell to 2.3% in comparison to Aprils 2.9%.
Moreover the figure is even more disappointing when economists had forecast a rise to 3.2%, that hasn’t materialised.
Canadian Imperial Bank of Commerce representative Jeremy Stretch has commented: ‘The Pound certainly hasn’t taken those output numbers particularly positively. Clearly it’s a shock. I wouldf be surprised if it’s a definitive trend change. We will see a continued trend lower in Euro-Sterling as we head through the year.’
Conversely Manufacturing Production plummeted to 3.7% YoY in May, from April’s 4.3% despite the favourable prediction of an elevation to 5.6%. Since this unfavourable data release the Pound has been fluctuating between the 1.70-1.71 figures against the US Dollar.
This afternoon however will see the GDP Estimate statistics for June, which rested at 0.9% in May; possibly enabling a boost if favourable.
The Euro conversely has seen its weakest exchange rate against the Pound in nearly 22 months. After recent Eurozone data pulling the Euro down, the prospect of Greece declining financial bailout could cause another problem for the weak Euro.
The President of the European Central Bank Mario Draghi has commented that economic mending within the EU is decelerating and has warned that Greece need assistance.
With a poor outlook for the Euro interest rates, remaining low for a long period, the speculation in the UK for rate rises has heightened with the BoE decision released on Thursday.
Although predicted to remain the same, such a hot topic decision should hopefully shed light on the plan for the UK interest rate time-frame.
Bank of England governor Mark Carney has been criticised for giving mixed signals on the fate of the UK rate hikes which has had a knock on effect on the Pound to cause some volatility.
Economists hope that Trade Balance data and the Asset Purchase Target also released on Thursday will prove favourable and enable the Pound to remain bullish in the currency market.
UPDATED July 9, 10:22 am GMT
The Pound to Euro (GBP/EUR) exchange rate is currently resting at 1.2569 ahead of Thursday’s highly influential day for both currencies.
The European Central Bank is coming under mounting pressure to control the high levels of the Single Currency.
The Pound alternatively is trading lower against the US Dollar on Wednesday, which will inevitably see more fluctuation as the week progresses with significant data releases.
Wednesday morning has seen the Halifax House Price data published at a lower than expected figure. YoY it was forecast to rise to 8.9% from 8.7%, but instead has rested on the disappointing 8.8% mark.
The Eurozone will publish more data on Friday, which could boost the currency further.