GBP/EUR Exchange Rate Advances Fractionally on Negative Sentiment towards ECB
The Pound to Euro (GBP/EUR) exchange rate advanced modestly on Friday even as Eurozone data printed positively. In spite of the fact that Friday’s British data showed economic growth cooled on both a quarterly and a yearly basis, the Pound held an advance over the single currency; albeit a fractional one. The common currency, meanwhile, has been depressed amid trader anxieties regarding the massive European Central Bank assessment of Eurozone banks.
If you're looking to make an international money transfer, we recommend TorFX.
The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2677.
Since the publication of dovish minutes from the Bank of England’s most recent policy meeting, the Pound has been unable to prevent a sustained bearish run. The minutes revealed that the majority of policymakers were keen to hold rates as they argued there are few signs of inflationary pressure.
Two of the nine rate-setters had dissented from the general consensus, however. Martin Weale and Ian McCafferty have voted for a rate increase in the past three policy meetings, but to no avail. William Schomberg, writing for Reuters, stated; ‘Weale and McCafferty are likely to be on their own for a while, unless they rejoin those voting to keep rates on hold.’
The delay to bets as to the timing of a BoE rate revision has compounded negative sentiment towards the central bank. Simon Peck, a gilts strategist at RBS, stated; ‘What we have seen is a validation of the current market assessment, that there will be moves later on in 2015.’
European sentiment has also taken a knock after domestic data publications threw up mixed results on Thursday. Although the headline figures for the Eurozone Composite, Manufacturing and Services PMIs looked positive at first glance, the accompanying Markit report showed that some indices were on the verge of depreciation.
Chris Williamson, Chief Economist at Markit said; ‘Growth of new orders slowed closer to stagnation and backlogs of work fell at a faster rate, causing employment to be cut for the first time in nearly a year.’
The Pound Sterling to Euro exchange rate has dropped to a low today of 1.2656.
On Friday the Pound has fractionally advanced against the common currency despite positive German data. The Consumer Confidence Survey was forecast to drop from 8.4 to 8.0, but the actual result reached 8.5.
The reasoning for the Euro decline can be attributed to the forthcoming results from the ECB’s extensive examination of banks in the Eurozone. Most traders fear that the stress test will show a number of banks to have failed which, in turn, might need to be met with ECB stimulus measures to resolve the issues.
Sterling has held slight gains on Friday despite Gross Domestic Product data showing British economic growth to have cooled. Quarterly GDP shows third-quarter growth at 0.7%, down from the second-quarter figure of 0.9%. Similarly, yearly GDP hit 3.0%, down from the 3.2% registered in the second quarter.
Pound to Euro Exchange Rate Forecast to Strengthen
With negative sentiment towards the ECB outranking the negative sentiment towards the BoE, it is likely that the GBP/EUR exchange rate will appreciate over the weekend. Sunday’s results from the ECB stress test, however, will be sure to provoke volatility for the Euro.