Interestingly enough, the EUR/GBP interbank exchange rate remains relatively unchanged today at the time of writing. The EUR/GBP pairing was trading at around 0.864 subsequent to the speech delivered by the newly appointed president of European Central Bank (ECB), Christine Lagarde.
Even though she called for the region to proceed with strength, resolve and courage, her speech was interpreted by analysts a little differently. It could be reasoned that she may have no immediate plans to put in effect, but the analysts saw it a bit differently.
Since Lagarde did not broach the issue of European Central Bank’s (ECB) longstanding deadlock with Germany, her decision to speak in Germany could be seen as a sign of the proverbial olive branch. This could mean that she is willing to build bridges not burn them.
Be that it as it may, EUR/GBP interbank exchange rate was constant today, now predictions are that the conflict of interest between the ECB and Germany, which occurred when the ECB dropped interest rates quite low which affected German savers, could now come to an end. On the other hand, euro forecasts do majorly depend on release of the much-awaited Eurozone producer price index (PPI). As per euro predictions, chances are that the PPI this time will show some improvement ranging from 0.5% to 0.1% for the month of September.
UK Services Sector subdued for October
The pound did not rise in comparison to the euro even though the United Kingdom Purchaing Manager’s Index (PMI) for the month of October surpassed the expected forecasts by intersecting the expansion and contraction. It clearly shows a restrained British economy. This is indirectly due to the final decision on Brexit. With each Brexit deadline, comes additional delay and indecision. Firms are awaiting for a decision on the current situation so that workflow resumes as per routine.
How does the EUR/GBP outlook seem?
Some euro predictions also optimistically speculate that euro could rise when German factory orders improve. The single currency could practically edge past the sterling tomorrow if the required German orders are filled up from -0.6% to 0.1%.
Tomorrow will also reveal the Markit PMI Composite figure for the month of October. Improvement in this domain can further boost market confidence in the single currency. On other hand, there is no concrete data from UK till Thursday, which is why the sterling traders will keep the Decembers election in focus.
The hopes are running high for the Conservative Party to lead in domestic polls, which could potentially be a boon for GBP/EUR exchange rate to return to normalcy.
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