Euro to Pound Sterling (EUR/GBP) and US Dollar (EUR/USD) Exchange Rates Forecast to Strengthen as ECB Praise QE
The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened by around 0.31% on Tuesday afternoon while the Euro to US Dollar (EUR/USD) exchange rate rallied by around 1.13%.
If you're looking to make an international money transfer, we recommend TorFX.
After the European Central Bank (ECB) released a report which indicated that quantitative easing is having a positive effect on banks’ ability to lend, even at this early stage, the shared currency strengthened versus many of its most traded currency rivals. Aiding the appreciation was a report from the International Monetary Fund (IMF) which projected Eurozone growth of 1.5% in 2015. The ongoing geopolitical tensions in Greece are far from being resolved, however, which is likely to see the common currency’s gains prove short-lived.
The Pound Sterling, meanwhile, fluctuated versus many of its major peers thanks to mixed results from domestic data. Ongoing political uncertainties as we approach the general election is also weighing on demand for the British asset.
The US Dollar softened versus the vast majority of its most traded currency rivals. This is due to domestic data failing to meet with median market forecast figures. Additional losses can be linked to the IMF report which stated that the US economy could see cool economic growth if the US Dollar continues to advance.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7224.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0675.
Euro (EUR) Exchange Rate Climbs despite Ongoing Greek Woes
As explained above, the situation between Greece and Eurozone officials is far from being amicably resolved, but trader focus shifted on Tuesday thanks to a positive Bank Lending Survey from the ECB. The survey suggested that QE was already having a positive effect which was evidenced by banks’ willingness to lend.
The common currency also appreciated in response to an IMF report which stated that the combination of a strong US Dollar and weak single currency would propel Eurozone economic growth.
Pound Sterling (GBP) Exchange Rate Fluctuates on Mixed Data
With the forthcoming general election hindering investor confidence, the Pound has struggled to sustain any significant gains. Tuesday’s mixed results from domestic data have seen the British asset fluctuate versus its most traded currency peers.
March’s BRC Like-for-Like Sales increased by 3.2% on the year, bettering the median market forecast growth of 0.5%. Also, March’s Consumer Price Index held at 0.0% on the year; avoiding moving into deflation territory as many economists had predicted.
US Dollar (USD) Exchange Rate Dives on IMF Report
As mentioned above, the IMF report stated that the US could see a cooler economic recovery with the strength of the US Dollar shortening business profits. This caused the ‘Greenback’ (USD) to soften considerably, which will likely be a welcome sight for the Federal Open Market Committee (FOMC), who had previously stated that the high valued US Dollar was presenting a stumbling block in terms of increasing the benchmark interest rate.
The US Dollar also suffered losses in response to disappointing domestic data. Of particular note, in terms of its detrimental effect on the Dollar, was Advance Retail Sales which increased by 0.9% in March; failing to meet with the median market forecast of 1.1% sales growth.
Euro to Pound Sterling (EUR/GBP) and US Dollar (EUR/USD) Exchange Rates Forecast to Hold Gains
Given the lack of domestic data to provoke changes, and with the single currency bolstered by positive economic reports, the Euro to Pound Sterling (EUR/GBP) and US Dollar (USD) exchange rates are likely to hold gains for the remainder of Tuesday’s European session.
Wednesday will be particularly significant for those invested in the shared currency with the ECB publishing their interest rate decision.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within the range of 0.7179 and 0.7235.
The Euro to US Dollar (EUR/USD) exchange rate was trending within the parameters of 1.0529 and 1.0707.