Pound Euro Weekly Forecast: GBP/EUR to Trim Gains amid Positive Eurozone Data?

The Pound Euro (GBP/EUR) exchange rate zigzagged higher last week, peaking at a two-week high, as above-forecast UK data supported Sterling.

So far this week the Pound (GBP) is holding the high ground. However, with positive Eurozone data forecast for the week ahead, the single currency could claw back its losses against Sterling.

What’s Been Happening: GBP/EUR Staggers Higher amid Rocky Trade

The Pound Euro pair dropped early last week, as fresh evidence of intense pressure on British businesses stoked fears about the UK economy. Meanwhile, stronger-than-expected Eurozone industrial production gave the Euro (EUR) a lift.

However, the Pound recouped these losses on Tuesday after the latest labour market report prompted Bank of England (BoE) interest rate rise bets.

Through the middle of the week, higher-than-forecast UK inflation and the British government’s Autumn Statement sparked volatility.

At the same time, a deadly missile strike in Poland rattled EUR investors, who feared a subsequent escalation in the Russia-Ukraine conflict. GBP/EUR moved higher overall.

Sterling consolidated its gains on Friday after UK retail sales beat forecasts, recovering by 0.6% in October.

Three Things to Watch Out for This Week

  1. PMI Surveys

Both the Eurozone and the UK flash PMIs for November are out this week. Both economies are set for deepening contractions in business activity, which may see GBP/EUR wobble.

  1. ECB Meeting Accounts

The minutes from the European Central Bank’s (ECB) most recent monetary policy meeting could boost the single currency if they signal further interest rate rises.

  1. Central Bank Speeches

Policymakers from both the BoE and the ECB are due to speak this week. Any hints about monetary policy moving forward could impact GBP and EUR, respectively.

GBP/EUR Forecast

This week we also have some high-impact reports from Germany, which are forecast to show positive results. Overall, the common currency could regain ground against Sterling. However, news from Ukraine could also affect EUR. As a result, we may see more choppy trade in the Pound Euro pair.

Samuel Birnie

Contact Samuel Birnie

Do Not Sell My Personal Information