Risk of GBP/EUR Exchange Rate Fluctuation on UK Optimism and Orders Stats
The Pound (GBP) has traded higher against the Euro (EUR) today, with cautious optimism about the Brexit process pushing the GBP/EUR exchange rate up.
This appreciation comes ahead of potential volatility on next week’s UK data, however, so might only be a temporary rise in the Pound to Euro pairing.
The coming Tuesday will bring Confederation of British Industry (CBI) data, covering industrial orders and business confidence in October and Q4 respectively.
Analysts are on the fence about how the orders data could print – some estimate a -1 point reprint, while others anticipate a drop to -6 points.
The former result would be the more positive of the two, but it is possible that the reading could also defy expectations and rise into a positive range.
The CBI’s business optimism reading is a similar situation – this might lead to a GBP/EUR exchange rate decline if it falls from -3 points to -8.
On the other hand, if respondents are more hopeful about business conditions over the October-December period then the Pound could trade higher against the Euro.
Euro to Pound Outlook: Is EUR/GBP Exchange Rate Turbulence ahead on Consumer Confidence Data?
The Euro (EUR) has fluctuated against the Pound (GBP) this week and could be on track for early losses in the EUR/GBP pairing on next week’s data.
The first major news will be Tuesday’s consumer confidence estimate for October, which is forecast to show a decline during the month.
A slide from -2.9 points to -3.2 points would indicate a growing number of pessimistic respondents, which could cause EUR/GBP exchange rate losses.
Lower confidence can lead to reduced consumer spending and tougher conditions for Eurozone retailers, which may ultimately drag down Eurozone GDP growth.
A larger negative figure isn’t a guaranteed outcome, however, as some economists are also forecasting an improvement with a shift to -2.6 points.
A slightly more positive result could reassure Euro traders and cause a rise against the Pound; this opens the door to potential EUR/GBP exchange rate gains next week.
Eurozone PMI Data could Cause EUR/GBP Exchange Rate Volatility
Another set of Eurozone data out next week will be Wednesday’s PMI estimates for October, which are set to show a mix of activity in Germany and the Eurozone.
Positive predictions include France’s manufacturing and services PMIs, both of which are expected to show growth during October.
Less supportively, however, levels of manufacturing and services sector activity are tipped to slow or remain steady in the Eurozone and Germany.
Compared to France, data from Germany and the Eurozone is considered more important so the Euro (EUR) might fall against the Pound (GBP) on such results.
Falling PMI readings will indicate a reduced pace of sector activity, so the Euro could drop along with EUR trader confidence.
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