Pound to Euro Rate Today - GBP EUR Exchange Rate Opens Higher on Forex Markets

August 16, 2014 - Written by David Woodsmith

STORY LINK Pound to Euro Rate Today - GBP EUR Exchange Rate Opens Higher on Forex Markets

The Euro to Pound rate (EUR/GBP) traded up at 0.80216 following a major weakening of Sterling in the foreign exchange rate markets this week, after hopes for any imminent interest rate hikes were dashed.

However, Friday has seen the publication of highly favourable UK Gross Domestic Product statistics which have indicated a larger than expected growth in the economy.

UK GDP Figures Could Help Provide Stability for the UK Economy

The Pound felt disappointment this week after the Bank of England (BoE) suggested that interest rate hikes were destined for the first quarter of 2015, provided the UK data proved favourable. However, Friday’s positive Gross Domestic Product (GDP) figures are suggesting an expansion larger than forecast is taking place in the economy. Economist Michael Saunders stated: ‘All the signs are that the UK economy is growing strongly across a broad base.’

The UK has seen a 0.8% GDP growth in the second quarter, which came after the Governor for the Bank of England, Mark Carney, commented that the UK economic recovery will face challenges. UK GDP reached 3.2% in the second quarter, despite forecasts of only 3.1%. Economist Howard Archer stated: ‘It is worth nothing that consumer spending likely saw robust growth. The hope has been that gradually improving global growth will increasingly help UK exports over the coming months, but this hope is under threat from heightened global geopolitical tensions.’

Geopolitical Risks Hinder Eurozone Recovery

The Eurozone recovery has had interference of late from geopolitical risks that have hindered trading, and rocked the currency market. As unrest in Ukraine and Russia continue, the Eurozone recovery faces volatility. Governor for the Bank of England (BoE) Mark Carney stated: ‘Geopolitical risks have intensified, and structural adjustment continues in the Euro area, where growth is expected to be modest. Pay growth has been remarkably weak, even as unemployment has fallen rapidly.’

However, when Sterling was trading at its strongest level in recent months, UK businesses such as Burberry voiced fears that damage would be taken by way of the strong exchange rate the Pound was holding in the currency market. Conversely in recent weeks the Pound has fallen quite dramatically, enabling UK businesses to benefit. 2013 saw the Eurozone purchase 45% of UK exports, which now raises fears as the Eurozone shows a lack of growth. Italy recently fell into recession as the Eurozone’s third largest economy, and Germany’s recent data performance has disappointed.

Future Forecast for the EUR to GBP Pairing

The Pound will witness a highly influential day on Tuesday with the publication of the UK Consumer Price Index and Retail Price Index. The Consumer Price Index will indicate any change in product prices which is used as a measure of inflationary levels; conversely the Retail Price Index shows the prices of goods for UK households. Furthermore on Wednesday the BoE will release their latest meeting minutes which could give the Pound some stability in the currency market if the Bank lean away from their recent dovish tone. Thursday however will show German, French and Eurozone Composite, Manufacturing and Services PMI which indicated economic health where figures over 50 denote productivity and expansion. Shortly after the Eurozone PMI the UK will see the release of Retail Sales, Public Finances, and Public Sector Net Borrowing.

With such a heavy week of UK data, the Pound could gain a backbone in the currency market if figures prove the UK economy is growing; however the Bank of England have recently proven more dovish which could hinder any rally for the Pound. The Eurozone recovery continues to appear fragile, with eyes watching the European Central Bank’s actions closely in the hope that further fiscal measures could improve the Eurozone recovery.

Euro to Pound (EUR/GBP) Exchange Rate Softens As Carney Confuses Forecasts Again

The Pound (GBP) is currently gaining against the Euro (EUR) in the currency market at 1.2501, following Governor for the Bank of England, Mark Carney’s, comments over the weekend regarding interest rate hikes. Last week saw interest rate speculation dashed, whilst Sunday has shown another conflicting comment by the Governor stating that wage increases won’t affect the pace of interest rate hikes.

Furthermore the Euro is suffocated with speculation as to what measures are left for the European Central Bank (ECB) to take to help encourage the Eurozone recovery. So far this session the EUR to GBP exchange rate has reached session highs of 0.8011 and lows of 0.7994.

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