Pound Tipped to Head Higher as Royal Baby Gets Nearer… yes really!

The pound to euro exchange rate is unchanged on Friday's closing level; GBP-EUR is seen at 1.1617 - not bad if we consider the GBP-EUR exchange rate opened at 1.1563 last Monday.

NB: The above quote is taken from the spot markets; your bank will affix their own discretionary spread to the figures. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here.

Royal baby to boost pound euro exchange rate

First we hear from Richard Driver at Caxton FX who is looking forward to the arrival of the Royal Baby:

"The pound has opened in positive mood this morning and this could well be connected with the news that Kate Middleton has gone into labour. The country has been swept up in the Jubilee and the Royal Wedding in the past couple of years and this has been a genuine boost to the UK economy, speculators could well be anticipating more retail spending as a result of the Royal Birth."

UK GDP data will be key driver of pound / euro this week

The big event for sterling this week will however be the release of GDP growth data from the second quarter.

Yuki Sakasai at Barclays says the EUR-GBP pair is particularly prone to GDP data:

"The preliminary estimate of Q2 GDP on Thursday will be the highlight for the GBP this week. UK preliminary estimates are known to be volatile, as they contain only about 60% of the hard data needed to measure GDP, and EUR/GBP tends to respond well to any surprises in the data.

"Although our forecast is in line with consensus at 0.6% q/q, the estimate is worth attention as a potential source of short-term volatility."

The euro: Southern debt back in the spotlight

For the euro we note Portugal is back in the headlines this morning in the absence of a ‘National Salvation’ deal between its coalition government parties.

No early elections have been called but situation looks very volatile.

Charles Purdy, Director of Smart Currency Exchange talks us through the key euro exchange rate drivers this week:

"The Euro stayed fairly range bound on Friday with no data of high impact being released. Although German Chancellor Merkel gave positive vibes whilst discussing the economy in Germany and the euro-zone, it had a muted effect on the markets. Perhaps with her looking for re-election in September, it was expected that she would remain optimistic.

"We have a quiet day again for the euro today, but with French and Germany manufacturing PMI data on Wednesday and Germanys Business Climate survey on Thursday, any unexpected data is likely to cause volatility for the currency. There are also increasing concerns for southern state debts and additional funding requirements.

"Portugal, Cyprus and Greece seem to be at the top of this list and could significantly increase instability for the Eurozone. So call your trade for the latest rates and updates."