Foreign exchange investors focused on the British pound to euro rate could be set for further losses on today's slew of EZ PMIs and Friday's UK GDP. We examine the latest euro-related fx forecasts targeting the sterling and the US dollar in the short, medium and long-term GBP/EUR forex outlooks.
- The British Pound to Euro exchange rate today: +0.08% higher on the day at 1 GBP = 1.16149 EUR.
- The Pound to Dollar exchange rate today: +0.54pct at 1.31325 USD.
- The Euro to Pound exchange rate today: 1 EUR = 0.86197 GBP.
The GBP/EUR was able to easily advance on Monday morning, holding its best levels of over 1.16 in the afternoon as sterling investors readjusted their positions on the shared currency ahead of Tuesday’s key PMI publications.
The US Dollar, on the other hand, put up a better fight and prevented GBP/USD from gaining much higher than 1.31UK CPI and Retail Sales data releases, and fluctuated in the region of 1.16 as the week drew to an end.
Other Pound Sterling / Currency Exchange News
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Latest Pound / Euro Exchange Rates
On Tuesday the Pound to British Pound exchange rate (GBP/GBP) converts at
1
The GBP to GBP exchange rate converts at 1 today.
The pound conversion rate (against us dollar) is quoted at 1.243 USD/GBP.
At time of writing the pound to canadian dollar exchange rate is quoted at 1.715.
At time of writing the pound to swiss franc exchange rate is quoted at 1.135.
At time of writing the pound to australian dollar exchange rate is quoted at 1.936.
Please note: the FX rates above, updated 16th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
British Pound (GBP) Rallies vs Euro (EUR) on Stronger-than-Forecast UK Ecostats
Sterling certainly drove the GBP/EUR exchange rate last week, slumping on Monday and Tuesday morning as investors prepared themselves for what was expected to be a week of dire post-Brexit ecostats.
However, after all of the week’s key UK data publications came in better than expected, the GBP/EUR, GBP/USD rates surged on Thursday, with investors taking the opportunity to buy the currency from its best levels.
Some investors had expected the week’s news, which included inflation, jobless claims and retail sales data collected in July, to disappoint due to Britain’s vote to Brexit in late June.
The released figures instead revealed that if the Brexit were to affect these prints, they hadn’t been felt yet.
The Euro, on the other hand, became a little limp later in the week allowing Sterling to more easily advance. The currency started out strong, rallying against many majors due to recent optimistic data.
However, mixed July inflation results and a vaguely optimistic tone from the European Central Bank’s (ECB) July minutes were not enough to keep the shared currency bullish towards the end of the week. The currency remained relatively sturdy however, holding GBP/EUR down from making a bigger recovery.
GBP/EUR Exchange Rate Forecast: Quiet Economic Calendar Ahead
After the last week’s showing of better-than-expected results was unable to cause Sterling to even advance past early-August levels, it is unlikely that the currency will be brought much higher in the coming week.
The week’s economic calendar is surprisingly quiet, and investors may not even react to Britain’s key Q2 Gross Domestic Product (GDP) figures publishing on Friday.
As this data was collected from April to June, its relevance in a post-Brexit voting British economy could be perceived as low by markets. The only other influential data expected next week is Wednesday’s BBA house purchases report from July.
So what can the Pound do amid a lack of key ecostats? Either investors will attempt to buy it higher from its cheap levels, or grim economic forecasts and Bank of England (BoE) easing bets will keep the currency weighed down.
Euro (EUR) Exchange Rates Could Surge if This Week's Eurozone Data Continue to Impress?
Markets were widely impressed by July’s Eurozone PMI reports, the figures that marked the key moment when analysts began to deduce that the Eurozone’s economy had been more resilient to Britain’s Brexit vote than expected.
Following the EU Referendum, the Euro plummeted in value due to forecasts that the Eurozone’s economy would be hit just as hard as Britain by the decision. However, July’s data indicated that this was not the case after all.
Will August’s report be the same story? This is what markets will be asking as Tuesday’s session approaches.
If August’s preliminary PMIs come in well below expectations, it could considerably rekindle fears that the Brexit has affected the Eurozone as well as cause bets of fresh ECB stimulus to increase. This would send the Euro plummeting, allowing even a weak Pound to advance.
On the other hand, solid PMIs would cause the Euro to sturdy even further, making it tougher for GBP/EUR to advance.
Other key Eurozone datasets due next week include Eurozone consumer confidence on Tuesday, final German Q2 growth scores on Wednesday, German IFOs on Thursday and German consumer confidence on Friday, making it a big week for the Euro.
Eurozone News Takes Focus
The Euro will likely drive the Pound to Euro outlook next week, with the single currency strengthening or weakening in response to the week’s Eurozone stats from Tuesday onward.
Tuesday’s Eurozone PMIs are likely to be the most influential datasets of the week for this exchange rate, and could set GBP/EUR’s tone and trends for the week ahead.
The most common forecast is that Eurozone PMIs will show that the Eurozone’s economic movement is largely on track, causing GBP/EUR to steadily drop lower. An unexpected uptick or slump in economic activity would cause GBP/EUR to plummet or advance a lot more sharply.
Key GBP and EUR Related Economic / Forex Events This Week
This week's euro-focused events in include the French / German Flash Manufacturing / Services PMIs source, French 10-y Bond Auctionsource, German Buba Monthly Report source, Italian 10-y Bond Auction source, Spanish 10-y Bond Auction source, GfK German Consumer Climate source, Eurozone Consumer Confidence source, German Final GDP source, Belgian NBB Business Climate source, German Import Prices, German Ifo Business Climate, Italian Retail Sales, M3 Money Supply source and the Private Loans.
This week's sterling-focused events include the CBI Industrial Order Expectations source, 10-y Bond Auction source, BBA Mortgage Approvals source, Inflation Report Hearings source, 30-y Bond Auction, CBI Realized Sales, Nationwide HPI, Second Estimate GDP source and the Prelim Business Investment.
Is the Pound to Euro Exchange Rate Undervalued?
In a sterling-euro exchange rate research piece, Lloyds Bank suggest the today's pound to euro exchange rate is ten per cent below fair value:
"The UK’s decision to leave the EU has had a greater impact on GBP than on EUR, possibly leaving the currency pair undervalued."
"Our estimates suggest that the decline in GBP/EUR since the UK’s EU referendum has left GBP approximately 10% undervalued."
"In part, this divergence reflects the rise in political uncertainty and the associated increase in risk premia since the referendum."
"GBP/EUR has made new post-referendum lows below 1.16, and the overarching uncertainty over the domestic political outlook leaves sterling susceptible to further bouts of volatility."
"More generally, however, the impact of the referendum on the rest of Europe, given forthcoming elections in the year ahead, suggests that the euro may also be vulnerable."
In their longer-term view for the euro to pound exchange rate:
"Long term [...] we believe this move to the topside is the last within the correction from the 0.70-0.69 support region."
"We have no sign of a top developing as yet, with a move above the 0.87 region seeing little in the way of meaningful resistance till the 0.90-0.92 region."