The British pound to euro rate (GBP/EUR) continued to hold gains today after yesterday's BoE Super Thursday saw no MPC members vote for an interest rate cut, against market predictions. Where next for the single currency against the pound sterling and the US dollar foreign exchange counterparts?
- GBP/EUR exchange rate rebounds from its year-to-date low of 1.23
- EU referendum represents the key event risk for the pound to euro rate today.
- Single currency edges lower against the US dollar.
While the latest German GDP data showed stronger-than-expected improvement, the British pound to euro exchange rate continued to extend its advance on Friday's session
Other Pound Sterling / Currency Exchange News
Latest Pound/Euro Exchange Rates
Having seen sterling's recovery stall, the GBP to EUR conversion rate could trend higher to reach 'fair value' of 1.30 according to Lloyds.
In the near-term outlook, the GBP/EUR conversion faces today's Bank of England Super Thursday.
The euro has been a fairly unstable prospect for investors so far today, on account of the destabilising effect of the earlier Eurozone ecostats.
In the first case, the German WPI for April either fell or failed to rise on both the month and the year. This equated to respective stagnations at 0.3% and a dip from -2.6% to -2.7%.
Additionally, confidence in the Euro has been knocked by the French base inflation rate for April falling from 0.7% to 0.1% on the month and from -0.1% to -0.2% on the year.
Euro to Pound Exchange Rate Forecast: Eurozone Industrial Production Data due Shortly, along with Greek Unemployment Rate Results
Today is set to bring a number of Eurozone economic announcements, although for the most part they are likely to focus on individual nations rather than the currency bloc as a whole.
The exception to this rule will be the imminently-released Eurozone industrial production result for March, which is expected to rise on both the month and the year.
Following on from this will be Greece’s unemployment rate results for February and Ireland’s inflation rate for April. Respectively, predictions have been for stagnation at 24.4% and for shifts from -0.3% to 0.2% on the year and from 0.4% to 0.1% on the month.
Pound Sterling (GBP) Exchange Rates Similarly Low on Growing Investor Concerns for BoE Announcements
Like the Euro, the Pound has failed to make any real gains against its peers so far, with the day’s biggest UK economic event, the Bank of England (BoE) interest rate decision, likely having the limiting effect on the UK currency.
While few economists expect an interest rate cut and virtually none expect a hike to take place, concerns are currently present that at least one member of the Monetary Policy Committee (MPC) may vote for a cut, which would likely devalue the Pound notably.
Additionally, economists and speculators will be poring over the simultaneously released minutes of the BoE’s meeting, which are likely to show an increased focus on how the ‘Brexit’ debate is affecting the performance of the UK economy.
US Dollar (USD) Exchange Rates have Mixed Faring after Previous Inventories and Budget Results
The US dollar exchange rate complex has trended narrowly against a number of its peers today, on account of the most recent domestic data concerning the nation’s finances.
This has consisted of yesterday’s falling crude oil, gasoline and distillate inventories, as well as the monthly April budget statement which fell from $156.7bn to $106.5bn.
Today will bring the announcement of the US’s claims figures for late April and early May, as well as a trio of Fed official speeches later on in the day.
GBP/EUR Exchange Rate Outlook: Brexit Likely to Remain Entangled with UK Economy Until Vote Date
The big news of the day, for the UK at least, will consist of the BoE announcing its interest rate decision for May.
The main attraction for spectators, however, is likely to be a press conference given by BoE Governor Mark Carney in the wake of the decision. The BoE has previously maintained neutrality when regarding the EU Referendum, and Sam Hill of RBC Capital Markets has stated:
‘Essentially, neither Governor Carney, nor the MPC collectively, are likely to want to be drawn into issuing a significantly new or decisive message about the future path of monetary policy…dependent on which way the vote goes’.
Despite this prevailing attitude, it is expected that Carney will be called on repeatedly to adopt some sort of stance regarding the upcoming Referendum vote.
Lloyds have released their latest research in the pound to euro exchange rate. Key points include:
- "Given significant event risks, including the EU referendum, on the horizon, GBP/EUR is likely to experience bouts of volatility but remain broadly range bound."
- "The trends in economic data have not been strongly reflected in recent currency moves, suggesting GBP/EUR is more concerned with other factors."
- "The British pound sterling is likely to be especially sensitive to changes in expectations a round the referendum given proximity to the event."
While the current week has featured a range of Eurozone data, the week to come is decidedly more lacking.
Among the major incoming Eurozone ecostats will be Tuesday’s speech from Peter Praet as well as the Eurozone trade balance due on the same day. Most notable will be Wednesday’s inflation rate results, while Thursday’s closing construction output results may also generate movement.
At time of writing the pound to pound exchange rate is quoted at 1.
At time of writing the pound to us dollar exchange rate is quoted at 1.244.
The live inter-bank GBP-CHF spot rate is quoted as 1.134 today.