Pound To Euro Exchange Rate Outlook: EZ GDP Sends GBP Off Highs To 1.279 EUR

Published: 20 Oct 2017 21:24 Currency Markets Ecomomy News Forex

British pound to euro exchange rate forecast

The Euro to Pound conversion rate (EUR/GBP) has resumed its recent trend lower on today's foreign exchange markets. Having edged down on Wednesday, sterling has recovered against the majors.

Over the course of April the euro to pound exchange rate has struggled amid concerns that weak inflation in the Eurozone will prompt additional stimulus measures from the European Central Bank (ECB). See today's update below.

Today's British pound to euro spot rate trends close to the best conversion level seen in two months.

However, following a better-than-expected German Consumer Confidence report, the euro exchange rates recovered some of its losses.

After the Fed opted not to engage in further monetary tightening at this juncture the Euro (EUR) received a strong boost against many of the majors, with the US Dollar (USD) markedly softened.

Confidence in the single currency was also shored up by the news that unemployment in Germany had fallen by -16,000, suggesting that the outlook of the Eurozone’s economic powerhouse might not be so bleak.

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Latest Pound/Dollar Exchange Rates

On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1

At time of writing the pound to pound exchange rate is quoted at 1.

The GBP to USD exchange rate converts at 1.262 today.

The GBP to CHF exchange rate converts at 1.138 today.

NB: the forex rates mentioned above, revised as of 29th Mar 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.

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Euro (EUR) Exchange Rates Recover Ahead of Wednesday's FOMC Statement

The combination of expectations of a dovish FOMC and positive domestic data sent the euro exchange rates higher versus most of its major peers today.

One particularly positive data result was May’s German Consumer Confidence Survey which eclipsed expectations of 9.4 with the result actually reaching 9.7.

Analysts at Scotiabank forecast Euro weakness to come, however, stating:

‘EUR has climbed back above 1.1300, its gains coinciding with the release of stronger than expected import price data from Germany. Near-term risk is likely to be dominated by the 2pm policy decision and statement, leaving EUR vulnerable to weakness as we look to the potential for a re-establishment of bearish positions on the basis of Fed-ECB divergence. The 2Y Germany-U.S. yield spread is wide, hovering around –135bpts at levels last seen in late March. In terms of sentiment, we note the moderation in risk reversals at the one month horizon, suggesting a decline in demand for protection against EUR upside.’
euro to pound exchange rate chart

Pound Sterling (GBP) Exchange Rates Hold Strong Position but Cool from April Highs.

Over the past few weeks the British Pound outperformed all of its most traded currency rivals.

The GBP’s appreciation can be linked to easing ‘Brexit’ concerns with opinion polls showing that the ‘Remain’ campaign is in the lead.

However, the Pound’s relief rally somewhat stalled today after domestic data failed to impress. Of particular disappointment was the quarterly reading for first-quarter British Gross Domestic Product which showed just 0.4% growth.

The UK unit is still holding a comparatively strong positon versus its major peers irrespective of weak domestic data.

US Dollar (USD) Exchange Rates Forecast to Decline ahead of the FOMC Interest Rate Decision

Ahead of the Federal Open Market Committee (FOMC) interest rate decision, the US Dollar weakened versus many of its currency rivals.

This is not due to expectation that the Fed will alter monetary policy at this time, but many are expecting the accompanying press conference to be dovish in tone.

If Fed Chairwoman Janet Yellen opts to reiterate the need to be highly cautious when approaching tighter policy, US Dollar exchange rates could extend losses.

Expected Eurozone announcements could overshadow UK data in the near-term

The next UK data due out will consist of the Gfk consumer confidence survey for April, as well as the reprint-forecast net consumer credit result for March.

It may be, however, that the high-impact Eurozone contributions to the exchange rate, covering inflation, GDP and unemployment, will put the common currency in a stronger position against its UK rival.

The euro exchange rates ticked high on Friday after French and Italian economic releases printed favourably.

Friday morning saw the Euro to dollar exchange rate (EUR/USD) gain a strong boost against rivals after the Eurozone’s Unemployment Rate and GDP results markedly bettered expectations.

The French Prelim GDP (source), French Consumer Spending, French Prelim CPI and Italian Monthly Unemployment Rate bettered market expectations.

Thus, in spite of domestic inflation dipping further into negative territory at -0.2%, the Euro to Pound Sterling (EUR/GBP) exchange rate trended higher ahead of the weekend.

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