Pound To Euro (GBP EUR) Forecast To Fall If UK GDP Data Disappoints

April 24, 2013 - Written by Tim Boyer

STORY LINK Pound To Euro (GBP EUR) Forecast To Fall If UK GDP Data Disappoints

This morning’s session brought the release of some less than impressive German data in the form of the latest Ifo Business Confidence survey. The gauge of the mood amongst business people in the eurozone’s leading economy showed a sharp drop-off from March’s figure of 106.7 to show at 104.4 this month. Analysts had been anticipating a dip to 106.2, but the sharp fall has raised fears that levels of activity in Europe’s premier economic superpower have hindered the euro on the day, meaning that the Pound to euro exchange rate (currency : GBP EUR) has remained firmly lodged in the 1.1700-1.1800 range throughout the session.

Gains for GBP/EUR would surely have been of a greater magnitude were it not for the sword of Damocles which continues to hang over Sterling in the form of tomorrow morning’s hotly anticipated Q1 GDP growth data for the British economy. The set-up for the release appears to be perilously balanced, with the consensus amongst analysts being that the key quarterly figure will show that activity in the UK’s economy expanded by a slender 0.1% during the first three months of 2013.

If the print shows at anything below this level, then it will be the UK’s second successive quarter of non-positive growth, meaning that the UK would have officially slipped into an unprecedented triple dip recession. The fall-out from such a scenario would be likely to trigger a sharp bout of selling pressure for Sterling sending the GBP EUR exchange rate down towards its 17 month low of 1.1344.

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