- Data-Light Eurozone Leaves Euro (EUR) Limp – Investor focus shifts to US Dollar
- Sterling Solidifies after Thursday Drop – GfK consumer confidence decent
- Forecast: German CPI on Monday – Forecast to leave negative territory
- Forecast: UK Bank Holiday Ahead – EUR/GBP to be driven by Eurozone trade
The Euro to Pound Sterling (EUR/GBP) exchange rate fluctuated narrowly on Friday after Thursday’s session saw the Pound slip on underwhelming UK data. However, Eurozone data remained quiet, dampening the Euro’s chances of a prolonged recovery.
EUR/GBP has recovered around 60 pips since hitting its three-month-low of 0.7566 earlier this week. At the time of writing, the pair was fluctuating in the region of 0.7640.
Euro (EUR) Left Flat on Light-Data as Markets Monitor Greek Economy
With the Eurozone light on key data since Wednesday’s session, investors have likely all readjusted their positions on the Euro for this week, leaving the Euro’s movement to be largely driven by cross-flows and the movement of its peers.
The Euro was recently bolstered slightly by news that progress was being made on Greece’s economy in the latter half of the week. Greece has remained a concern for investors since its financial crisis began near the turn of the decade. The nation continues to face significant economic difficulty.
Wednesday saw a ‘breakthrough’ debt relief agreement between Greece and the Eurozone, but this only resulted in a limited improvement in Euro sentiment as the move was seen by analysts as a compromise.
Thursday followed with news that Greece could return to debt markets in 2017. According to the Wall Street Journal, the nation’s finance ministers stated that Greece plans to begin a return to bond markets if the economy continues to improve.
Greek Deputy Finance Minister, George Chouliarakis, stated;
‘We will begin efforts to return to markets in 2017, we will not be in a rush… Our goal is not to be in a rush, but rather to create confidence.’
Pound (GBP) Firms Footing after Thursday Drop
Sterling lost a chunk of its weekly bullishness on Thursday as markets indulged in a burst of profit-taking following its recent multi-month highs and reacted to worse-than-expected UK data released on Thursday.
Key preliminary Q1 Gross Domestic Product (GDP) was released on Thursday morning, with the quarter-on-quarter score coming in at 0.4% as expected.
Unfortunately the Pound was dented by the year-on-year score, which revealed a slowing from 2.1% to 2.0%. The BBA’s latest loans for house purchase report also disappointed, dropping from 43,854 to 40,104 despite being forecast to improve to 44,700.
However, the Pound was slightly bolstered again on Friday morning by news that consumer confidence had not dropped further, as was expected. GfK’s consumer confidence survey was expected to worsen from -3 to -4, but instead lightened to -1.
The Pound also remained sturdy from the week’s earlier news – a series of polls predicting that Britain was increasingly likely to ‘Remain’ in the EU rather than ‘Brexit’ after June’s EU referendum.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: German CPI Ahead
Key news from the United States later today could allow the Pound to solidify additional gains against the Euro before the end of the week, as Euro investors are likely to set their sights on the US Dollar.
Federal Reverse Chair Janet Yellen is expected to speak in the afternoon and if she adopts a hawkish tone, like her peers have done in recent weeks, the Euro could flounder as investors flock to the Dollar.
However, EUR could gain against the Pound if she speaks dovishly, which could leave the shared currency favourable to investors compared to USD.
The Euro is likely to take point in movement of the EUR/GBP exchange rate at the beginning of next week’s session, as UK markets will be closed to observe May’s second bank holiday Monday.
As a result, Germany’s preliminary May Consumer Price Index (CPI) report will likely dominate the attention of Eurozone investors on Monday, with UK markets reacting on Tuesday morning.
Unless ‘Brexit’ debates continue to be heated next week, with considerable points being scored for the ‘Remain’ or ‘Leave’ campaigns, Sterling could remain relatively uninspired until Thursday, which sees the release of May’s Manufacturing PMI.
The Euro to Pound Sterling (EUR/GBP) exchange rate trends in the region of 0.7640, while the Pound Sterling to Euro (GBP/EUR) exchange rate trades at around 1.3090.
