GBP/EUR Exchange Rate Dives on German Data
In the aftermath of the re-emergence of a historic miscorrelation between British wages and inflation, the Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.40%. Conversely, the common currency has enjoyed a healthy appreciation due to particularly positive data pertaining to Germany.
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The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2511.
Pound (GBP) Declines on Rising Inflation
Despite the fact that the Bank of England has targeted higher inflation as one of the conditions for monetary policy normalisation, Tuesday’s increase has been negatively received due to a miscorrelation with wages. Last week, the Pound enjoyed an upsurge as average earnings rose higher than the rate of inflation for the first time since 2007. Tuesday’s Consumer Price Index showed inflation to have increased from 1.2% to 1.3%, negating the increase in wages.
The Pound Sterling to Euro exchange rate has fallen to a low today of 1.2480.
Euro (EUR) Climbs on Economic Sentiment
In contrast, positive European data has allowed the common currency to strengthen against the majority of its most traded currency rivals. The German Economic Sentiment Survey increased impressively to 11.5, eclipsing the market consensus of a rise from -3.6 to 0.5. The German Current Situation Survey also increased, gaining from 3.2 to 3.3 despite the median market forecast of a drop to 1.7. In addition, the Eurozone Economic Sentiment Survey increased from 4.1 to 11.0.
‘On balance, the ZEW survey offers some tentative signs of hope for the German economy,’ Capital Economics Jennifer McKeown said.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Soften
With the most recent Bank of England policy meeting minutes due for publication on Wednesday, the GBP/EUR exchange rate is likely to soften. This is because the policymakers are notoriously dovish on the subject of interest rates, and the two dissenters from that trend may decide to tow the party line in light of recent UK reports.
The Pound Sterling to Euro exchange rate has advanced to a high today of 1.2559.