Pound Euro weekly forecast: The GBP/EUR exchange rate roared higher last week in response to a dismal GDP print from the Eurozone, but can the Pound extend gains this week?
What’s Been Happening: Euro (EUR) Exchange Rates Undermined by Collapse in Q2 Growth
Euro (EUR) exchange rates opened last week on solid footing, rising on the back of improving German business morale as well as a sell-off of the US Dollar.
However, the single currency failed to consolidate these gains following the publication of the latest German and the Eurozone GDP estimates.
First up was Germany’s figures, with a larger-than-expected slump in growth in the second quarter, as well as a surprise plunge in inflation last month, undermining the Euro.
This was following by the Eurozone release, which revealed the bloc suffered a record contraction in Q2 and put even more pressure on EUR exchange rates.
The Pound, meanwhile, enjoyed a bullish run last week, with Sterling (GBP) exchange rates benefiting from some end-of-month flows as well as the widespread weakness of many of its peers.
Pound Euro (GBP/EUR) Weekly Forecast
1. BoE Rate Decision
In the spotlight this week will be the Bank of England’s (BoE) latest rate decision. No policy changes are expected from the BoE this week, but GBP exchange rates may be influenced by the bank’s forecasts as well as any hint toward negative interest rates.
2. German Industrial Data
For EUR investors the focus this week is likely to be on Germany’s latest industrial data. Will another pick up in factory orders and industrial production help to revive the Euro’s fortunes this week?
The recent coronavirus resurgence in Europe and parts of the UK may also influence the GBP/EUR exchange rate this week, with any notable spikes on either side of the channel likely to weigh on their respective currencies.
Volatility Ahead for the Pound Euro Exchange Rate
Looking ahead, the GBP/EUR exchange rate may be met by some volatility this week in response to renewed coronavirus concerns as well as the BoE’s latest policy decision.