Outlook For GBP EUR Exchange Rate Hangs On Eurozone GDP Data

Published: Wednesday, 5 June 2013 09:00 BST - Written by David Woodsmith

STORY LINK Outlook For GBP EUR Exchange Rate Hangs On Eurozone GDP Data

Today brings another packed schedule of data releases with several tier one risk events likely to trigger pronounced price action for the world’s major currency pairs.

The latest Q1 GDP growth data in the eurozone will have an immediate effect on levels for the euro should it show at anything other than the anticipated quarterly -0.2%. A print of significantly below analysts’ expectations will cause market speculation regarding a further loosening of the region’s monetary policy to reach fever pitch ahead of tomorrow’s hotly anticipated European Central Bank policy announcement. With the spectre of negative interest rates still hanging over the eurozone following last month’s decision by the ECB to trim its key lending rate to a record low of 0.50%, a poor showing from this morning’s growth figure would surely send the single currency sharply lower. A near-term target for the Pound to euro exchange rate (currency : GBP EUR) in such a scenario would be the band of resistance just above the 1.1900 threshold which the pair has tested on more than one occasion in recent months.

PMI surveys come and PMI surveys go, but in terms of the British economy, one PMI survey stands head and shoulders above all of the others – the PMI Services sector survey. With over three quarters of the UK’s economic activity centred on this key sector of the economy, that’s hardly a surprise. This morning brings the release of the latest edition of this closely-monitored gauge of the health of Britain’s combined tertiary industries, lending further potential for price volatility for the GBP EUR exchange rate. Expectations are relatively high for the release – a reading of above the anticipated print of 53.2 will be required to nudge Sterling higher against the euro ahead of the eurozone GDP data. Because of this, the potential exists for the figure to trigger some selling pressure on the Pound.

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TAGS: Daily Currency Updates Euro Forecasts Euro Pound Forecasts Pound Eu Forecasts