Euro Pound Exchange Rate Forecast: EUR/GBP Likely to Climb on German CPI Inflation Data

Modified: Thursday, 26 September 2013 16:57 BST - Written by Ben Hughes

STORY LINK Euro Pound Exchange Rate Forecast: EUR/GBP Likely to Climb on German CPI Inflation Data

GBP EUR and GBP USD have headed lower on the day following the publication of disappointing UK growth data earlier. Meanwhile, positive jobs numbers in the States could trigger a retracement for GBP USD.

The Pound to Euro exchange rate (GBP/EUR) is currently trading down by 0.22% at 1.1867 GBP/EUR. The Euro to Pound exchange rate is currently trading at 0.8427 EUR/GBP.

A heady combination of tame UK GDP data and better than anticipated US labour market figures have sent the Pound US Dollar exchange rate (GBP/USD) down on the day. Cable was teetering just above the 1.6000 threshold by the latter part of today’s European equities session. Analysts had been expecting this morning’s finalised Q2 UK growth figure to confirm earlier estimates of an annualised expansion of 1.5% for the UK economy, so a print of only 1.3% came as a considerable blow to Sterling.

Meanwhile, on the other side of the pond, this afternoon’s weekly Initial Jobless Claims numbers showed at well below the consensus expectation of 325,000 to print at 305,000. The previous week’s figure was also downwardly revised to 310,000, provided a further boon for the Buck. The news saw the Greenback well supported during this afternoon’s session as market participants priced in a cut to QE from the Fed sooner rather than later.

Meanwhile, the Pound has also come under selling pressure on the day against the euro. Investors holding the single currency appear willing to put Germany’s power vacuum and Portugal’s ongoing debt woes to the back of their minds and have instead focussed on this morning’s surprisingly poor UK GDP numbers. The net effect of these factors has sent the Pound euro exchange rate (GBP EUR) down into the 1.1860s as the closing bell for today’s eurozone shares session approaches. The pair had been trading at above the 1.1900 threshold before the release of this morning’s British growth numbers.

If tomorrow afternoon’s German CPI inflation data prints above expectations, then investors are likely to begin taking ECB President Mario Draghi’s recent threats to cut eurozone interest rates less seriously and the EUR GBP exchange rate is likely to climb higher.

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