Pound Sterling to Euro (GBP/EUR) Exchange Rate Declines on British Construction Output
After struggling on Thursday from less-than-impressive German data, the single currency has appreciated against high-yielding currencies on Friday. A lack of domestic data and fading trader risk sentiment has aided the Euro strength. Meanwhile, mixed data from the UK has caused Sterling to depreciate against the Euro.
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The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2672. Movement is around -0.25% as a result of the issues addressed above.
On Thursday the Pound experienced minimal volatility as trader focus was dictated by US Dollar softness. A slight depreciation can be attributed to house price balance data which declined beyond the median market forecast of a drop from 39.0% to 36.0%, with the actual result falling to 30.0%.
Those invested in the single currency would have been disappointed, but not altogether surprised, to see yet more soft German data. German Trade Balance fell below the market consensus of a decline from 23.5 billion to 17.7 billion, with the actual result having dropped to 14.1 billion.
Additionally the German Current Account, seasonally-adjusted Exports and seasonally-adjusted Imports all showed a declination beyond the median market forecasts.
The Pound Sterling to Euro exchange rate has fallen to a low today of 1.2667.
Friday’s British data has been relatively mixed but Sterling has depreciated against the majority of its most traded currency peers. This is likely due to negative sentiment towards the Pound after several speeches from UK officials indicated Sterling overvaluation as a contributor to slow economic progress.
Total Trade Balance was forecast to improve slightly from -£3079 to -£3000, but the actual result eclipsed expectations by rising to -£1917. Conversely, Construction Output was forecast at 2.9% growth, but August’s output contracted by -0.3%.
A lack of European data on Friday has been beneficial for the single currency. With several speeches from European Central Bank officials due over the course of the day it is highly likely that there will be increased Euro volatility.
Forecast for the Pound to Euro Exchange Rate
Given that traders have already priced in the possibility of additional stimulus measures from the ECB, the Euro is most likely to continue trending higher against its most traded rivals. As risk appetite continues to fade the single currency is sure to hold a high position against risk-correlated currencies.
Speeches from Bank of England officials over the course of Friday could provoke changes for the Pound. However, when you consider that several policymakers have anxieties over Sterling overvaluation it is very unlikely that the speeches will contain any hawkish elements.