Pound to Euro Forecast: Key GBP EUR Exchange Rate Predictions Surrounding the Jackson Hole Summit

August 24, 2017 - Written by John Cameron

STORY LINK Pound to Euro Forecast: Key GBP EUR Exchange Rate Predictions Surrounding the Jackson Hole Summit

Ahead of the Jackson Hole event today, the British pound to euro exchange rate is holding steady at the day's opening levels, quoted at 1.08604 on 25th August.

All eyes will be on Janet Yellen and Mario Draghi today. Will the ECB President talk down the euro? Will GBP/EUR see a relief rally?

Euro (EUR) Subdued Ahead of Jackson Hole Summit

EUR/GBP ceded some of its recent gains this morning as foreign exchange markets take stock ahead of the start of a central bank summit in the US later today.

After racing higher against Sterling on Wednesday the Euro appears to be a little more subdued this morning as markets pause ahead of the start of the Jackson Hole symposium later today.

Investors are hoping that the central bank summit will provide markets with some indication of future monetary policy as a number of prominent bankers make speeches.

EUR investors are of course particularly interested in the speech by European Central Bank (ECB) President, Mario Draghi tomorrow evening as observers hope that Draghi will drop some hints on the possible tapering of the bank’s quantitative easing programme, which is currently set to end later this year.

Michael Hewson, chief market analyst at CMC Markets, said;

‘The markets believe that the ECB is on course to begin tapering their stimulus program, and the only unknown is the timing of such measures. Whether Draghi likes it or not the ECB will have to cut back on stimulus simply because the outstanding bonds available to buy is diminishing rapidly, and the continued expansion in economic activity and factory growth points to a fairly resilient recovery in Europe.’

However the latest minutes from the ECB suggest that the bank remains cautious about ending its stimulus programme as the recent strength of the Euro dampens efforts by policymakers to increase inflationary pressures in the Eurozone.
Because of this Draghi may be reluctant to discuss the ECB’s monetary policy in his speech tomorrow as any suggestion of tapering or a rate hike likely to drive the Euro higher.

Pound (GBP) Clings to Gains as UK GDP Strengthens

After creeping slightly higher at the start of the European session Sterling managed to stabilise at its higher levels as the UK released its latest GDP estimate.

According to figures published by the Office for National Statistics (ONS) the UK economy grew from 0.2% to 0.3% in the second quarter, in line with expectations from economists and allaying fears that official growth figures may have deviated from the generally more positive figures provided by private surveys.

CMC Market’s Hewson said ahead of the release;

‘The main puzzle remains around the divergence from private survey data, and the ONS numbers which have been uniformly negative.’

‘For all of this year these independent surveys have been much more optimistic, from the likes of the CBI and the Markit, and quite frankly better when it comes to reporting the improvement in order books in terms of surging export markets, as well as rising employment levels in the sector.’

However a little more disconcerting for investors was the release of the accompanying Business investment figures which showed that investment remained flat between April and June, falling from a 0.6% jump in the first quarter and falling short of a forecast 0.4% rise.

This lack of investment appears to have been prompted by rising political uncertainty as Theresa May’s failure to secure a larger majority in Parliament in June’s election led to increase concerns over the Brexit process.

EUR GBP Exchange Rate Forecast: Markets to Focus on

Outside of Draghi’s speech at Jackson Hole tomorrow evening the EUR GBP exchange rate may also be impacted by the release of Germany’s latest Business Climate data on Friday morning
.
Analysts currently predict that the index will have slipped from 116 to 115.5 in August, however upbeat PMI figures from Germany earlier in the week suggest that business sentiment may be higher this month than first expected, helping to facilitate a possible rise in the Euro.

Meanwhile a lull in UK economic data until next Wednesday may cause the Pound to slide over the next few days as Sterling is left exposed to the possibility of further concerns over Brexit.

Current Interbank Exchange Rates

At the time of writing the EUR GBP exchange rate was trending around 0.9211 and the GBP EUR exchange rate was trending around 1.0857.

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TAGS: Daily Currency Updates Euro Pound Forecasts