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EUR GBP Exchange Rate Forecast ? Key German Data and BoE Decision Ahead

March 13, 2017 - Written by Ben Hughes

The Euro to Pound exchange rate dropped from highs when markets opened on Monday as investors bought the Pound back up from its recent lows ahead of this week’s session, which could even see the beginning of the Brexit process.

EUR/GBP surged last week, rising from 0.8638 and gaining over a pence throughout the week to end the week at the level of 0.8776. The pair briefly hit a fresh seven-week-high of 0.8786 on Monday morning before falling over -0.3%.

EUR Holds Ground on Last Week’s ECB News



Demand for the Euro shot up towards the end of last week’s trading session as investors were surprised by the latest comments from European Central Bank (ECB) President Mario Draghi.

While Draghi reasserted that the bank’s quantitative easing (QE) program would remain in place until least the planned ending in late 2017, he also stated that Eurozone deflationary concerns had largely vanished.
The Eurozone’s inflationary pressures remain subdued, but the bloc is seemingly no longer at risk of deflation which is a huge plus for EUR traders.

However, with the Netherlands general election taking place on the 15th, political jitters have returned this week and the Euro was unable to hold its highs on Monday.

GBP Bought From Lows as Investors Prepare for Brexit



The Pound plunged for most of last week on Brexit jitters and concerns about Britain’s 2017 Gross Domestic Product (GDP) outlook.
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Analysts and investors are preparing for the possibility that Article 50 could be activated as soon as this week, so while Sterling is jittery the currency has been bought from its cheapest levels by some more confidence traders who believe the currency will not plunge when Article 50 is activated.

Some analysts from the Bank of Americqa and JPMorgan are bearish on the Pound in relation to Article 50, but others like Morgan Stanley believe Article 50 – which is a foregone conclusion – has already been priced into the Pound.

The Pound hit its recent lows due to concerns that UK growth will slow as inflation spikes and slower wage growth cause UK consumers to rein in spending.

EUR/GBP Forecast: German Data in Focus Tuesday



Much of this week’s key UK economic events won’t take place until later in the week, leaving the Euro to drive EUR/GBP movement until Wednesday unless new Brexit news shocks traders.

A slew of influential German ecostats will be published on Tuesday, including Germany’s final February Consumer Price Index (CPI) results.

ZEW will also be publishing its March economic sentiment surveys for Germany and the Eurozone bloc, and Eurozone industrial production figures from January will also come in.

If these reports impress, the Euro could once again test its highs against the Brexit-jittery Pound.

Speaking of Brexit, if Article 50 has already been priced into GBP trade the British currency is unlikely to see a significant movement when the Brexit process proper begins – which could be as soon as Wednesday if the Brexit bill passes smoothly through UK Parliament.

However, there is also the chance Sterling could fall as some traders are faced once again with the reality of Brexit.

Wednesday will see the publication of key employment stats. UK jobless claims figures from February will be published as well as employment figures (including wage growth) for the three months into January. Eurozone employment figures from Q4 2016 will also be published.

Thursday’s session is shaping up to be the biggest of the week however, as Eurozone February Consumer Price Index (CPI) results will be published and the Bank of England (BoE) will hold its March policy decision.

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TAGS: Euro Pound Forecasts

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