Pound Euro Outlook: Eurozone GDP Data Sends GBP EUR Exchange Rate Higher - Gains Forecast

May 15, 2014 - Written by James Fuller

STORY LINK Pound Euro Outlook: Eurozone GDP Data Sends GBP EUR Exchange Rate Higher - Gains Forecast

Pound Euro Exchange Rate Forecast: Today’s session has been marked by the release of a raft of Gross Domestic Product data sets from four of the world’s most significant economies. The results proved to be a decidedly mixed bag. The Pound Sterling to Euro exchange rate is trading up +0.32% at 1.22633 GBP/EUR.

We take a look at the effect the results are likely to have on the Pound Japanese Yen (GBP/JPY) and Pound euro (GBP/EUR) exchange rates.

Last night’s Asian session brought the publication of Q1 Gross Domestic Product numbers for the Japanese economy and their net effect saw the Pound Yen exchange rate drop to as low as 170.72 GBP/JPY earlier. The numbers showed that the level of growth in Asia’s second most significant economy thrashed expectations, rising by 1.5% during the three months to the end of March.

Analysts had been anticipating a far more moderate showing of 1.0%, so the Yen enjoyed sustained support as a consequence. The figure was a vast improvement on the Q4 2013 showing which came in at a paltry 0.1%. the positive effect of the strong growth figures would have favoured the Yen more if it wasn’t for the fact that Japan’s sales tax was hiked in April. This has led economists to suggest that the Q1 figure was boosted by increased consumer spending in the lead-up to this one-off price increase. Another strong showing from the Q2 figure – out in 3 months – will be required to confirm that the Japanese economy is staging a true recovery from the slump which it entered after the nation’s decimating banking crisis which broke some 15 years ago.

Meanwhile on the other side of the world, this morning session saw the publication of GDP data for the German, French and eurozone economies. Economists had been expecting the Q1 French GDP figure to show a slight improvement on the counterpart Q4 2013 print of 0.8% - they were disappointed, with the number once again showing at 0.8%. The advanced version of the whole of eurozone Q1 GDP data also came out well below expectations – showing at an annualised 0.9% versus an anticipated 1.1%. However, the poor releases were in some part mitigated by a stronger than expected result from this morning’s German Q1 GDP numbers – they printed at an encouraging annualised level of 2.3%. The Pound euro exchange rate has tested higher in response to this raft of data releases, touching 1.2271 GBP/EUR earlier. Analysts forecast that there could be further near-term gains to come for GBP/EUR.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Euro Forecasts Euro Pound Forecasts Japanese Y Forecasts