Exchange Rate Today - Euro to Pound (EUR/GBP) Higher but Forecasts Mixed This Week

Modified: Tuesday, 1 July 2014 09:21 BST - Written by Toni Johnson

STORY LINK Exchange Rate Today - Euro to Pound (EUR/GBP) Higher but Forecasts Mixed This Week

Exchange rate forecasts look volatile for the Euro to Pound (GBP) and Dollar (USD) rates next week with a potential minefield for the EUR as a plethora of potentially harmful economic data releases are due.

Preliminary data last Friday showed that German consumer price inflation rose 0.3% this month, more than the expected 0.2% gain, after a 0.1% fall in May offering some support to the single currency, but those gains are likely to be short-lived.

After already being under sustained pressure from the European Central Banks decision to cut interest rates to a new record low and introduce the historical measure of a negative bank deposit rate, the Euro has already weakened marginally this month.

Data out of the Eurozone region in recent weeks has highlighted that the so called Eurozone recovery has stalled. Unemployment is stuck close to record high levels and manufacturing and industrial production across the 18 member region continues to be stagnant. Even economies such as Germany, the region’s largest, has seen production and confidence decline this month as geopolitical tension has weighed.

Next week sees the release of the now dread Eurozone inflation rate data. After slipping to a record low level of 0.5% last month and being the cause for the ECB to take the action it did this piece data could significantly weaken the Euro further. Economists are expecting an unchanged figure of 0.5%, however it disappoints to the downside we can expect the markets to react negatively as speculation will surely rise that the ECB will have to take further action to fight off the threat of deflation in the Eurozone. The Central Bank’s target of 2% seems extremely far away.

Tuesday will see the publication of the region’s latest unemployment data. With the number of jobless Europeans totalling around 25 million (18 million in the Eurozone) any indication that the more jobs are not being created will have a negative impact. Then again tiny improvements as seen in recent months are likely to get the economists that are so desperate for any positive news for the region to get all excited and hail the recovery as back on track and in turn support the Euro.

Manufacturing data is also due that day and is forecast to show a dip in growth for June from May’s figure of 52.2 to 51.9. Any figure above 50 indicates expansion whereas one below indicates contraction.

Wednesday is a big day for the Euro next week as the latest estimate for GDP in the first quarter is due for release. GDP is forecast to remain unchanged at 0.2% quarter on quarter and the annual figure is forecast to climb to 0.9%. Needless to say if the data disappoints the Euro is likely to weaken.


The Pièce de résistance however is on Thursday when the ECB holds its latest policy meeting. Some economists are forecasting that interest rates could be cut even further from 0.15% to 0%. Investors will also be keen to watch the ECB press conference for signs if it is considering implementing a quantitative easing programme.

Key upcoming events for EUR/GBP

Monday June 30th – Eurozone – German retail sales
Italy PPI/ Inflation rate
Eurozone Inflation/ core inflation rate
Tuesday July 1st – UK – Markit/CIPS Manufacturing PMI
Eurozone- German unemployment rate
Eurozone manufacturing PMI
Unemployment rate
Wednesday July 2nd – UK – Construction PMI
Eurozone – GDP growth rate
PPI
Thursday July 3rd – Eurozone – Markit Comp and Services PMI
UK- Markit Services PMI

Euro Pound Rate Update 30/06/2014

The Euro made gains against the Pound after the latest Eurozone inflation data came in as forecast. With inflation stable economists will now be looking ahead to the European Central Bank’s monetary policy committee meeting on Thursday
.
The Pound was weakened by the release of softer than expected mortgage lending data which suggests that the UK’s housing market may be slowing down.

Earlier in the month the Bank of England singled out the nation’s property market as a major threat to the UK economic recovery.

Key Euro Exchange Rates on Tuesday 1st June 2014

The Pound Sterling to Euro exchange rate is trading down -0.06% at 1.24887 GBP/EUR.
The Euro to Australian Dollar exchange rate is trading down -0.27% at 1.44814 EUR/AUD.
The Euro to Pound Sterling exchange rate is trading up +0.05% at 0.80072 EUR/GBP.
The Euro to US Dollar exchange rate is trading up +0% at 1.36918 EUR/USD.
The US Dollar to Euro exchange rate is trading down -0% at 0.73037 USD/EUR.

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