- 2016 GBP EUR Exchange Rate Hovers Around 1.17 – Gradual falls this week
- Tuesday sees Fluctuations – Both currencies see low demand as holiday period approaches
- UK’s Borrowing Figures Disappoint – Sterling trade weaker on Wednesday
- Eurozone Consumer Confidence Improves – Gives Euro slight boost
- Forecast: Quiet Trade Expected on Friday – UK GDP may not inspire much movement
2016 GBP EUR Exchange Rate Falls to 1.17 on Thursday
The 2016 GBP EUR exchange rate fell to a new weekly low on Thursday as Sterling continued to be weakened by Brexit news throughout the day. With a generally bearish 2017 outlook for the UK economy and the Pound, investors saw little reason to buy GBP and this trend could continue on Friday.
As for the Euro, demand for the single currency improved due to continued weakness in the US Dollar. As USD is sold from its highs, the Euro benefits from negative correlation.
GBP EUR is on track to register losses this week as Friday’s data is unlikely to inspire a significant boost in the Pound. Even if Britain’s final Q3 GDP results beat expectations, Brexit concerns could weigh on the British currency.
(Previously updated 12:27 GMT 22/12/2016)
The 2016 GBP EUR exchange rate continued to perform poorly on Thursday. When European markets opened in the morning, GBP traders immediately reacted bearishly to the latest Brexit news.
A report emerged indicating that any one of the European Union’s member states would likely have the ability to veto a post-Brexit UK-EU trade deal or any single market access.
Britain’s continued access to the single-market needing approval from all other EU nations caused further uncertainty among investors, leaving the Pound weaker on Thursday.
(Previously updated 16:30 GMT 21/12/2016)
2016 GBP EUR Exchange Rate Slides in Wednesday Trade
The 2016 GBP EUR exchange rate fell once more on Wednesday, this time with more definitive movement as the Pound was easily the weaker of the currencies during Wednesday trade.
UK public sector net borrowing results as well as Brexit concerns weighed on GBP trade throughout the day, while the Euro benefitted considerably from negative correlation with the day’s US Dollar selloff.
Demand for the Euro was also boosted slightly in the afternoon following the publication of the Eurozone’s December consumer confidence figures.
Confidence was expected to lighten just slightly to -6, but instead lightened to -5.1. As a result of the day’s news, the 2016 GBP EUR exchange rate spent the day in the region of 1.18.
(Previously updated 12:48 GMT 21/12/2016)
Unsurprisingly, movement in the 2016 GBP EUR exchange rate continued to be limited on Wednesday as markets became increasingly quiet ahead of the long weekend’s holiday period.
The Pound to Euro exchange rate continued to edge lower during the European session, particularly after the publication of Britain’s November public sector net borrowing results.
Expected to worsen from October’s 4.3b result to 11.6b, the figure printed at a worse than forecast 12.2b. This took the UK’s national debt to a new record high in news that left GBP investors even more sluggish.
The afternoon’s Eurozone consumer confidence results are unlikely to inspire much strength in GBP EUR towards the end of the day as the pair trends in the region of 1.18.
(Published 07:00 GMT 21/12/2016)
The 2016 GBP EUR exchange rate fluctuated on Tuesday as the day’s ecostats failed to inspire much new movement in the Pound or Euro. Demand for both currencies has been weak, but Sterling has generally performed worse than the Euro due to the week’s Brexit jitters.
GBP EUR continued to trend below the week’s opening levels and regularly fluctuated between 1.19 and 1.18 throughout the day.
Pound (GBP) Fluctuates due to Lack of Fresh Supportive Factors
Tuesday didn’t offer much new for GBP traders. The British currency spent most of the day fluctuating limply due to downside factors that emerged over the last week.
Last week’s Bank of England (BoE) policy meeting continued to be one of the most profound downside factors in Pound trade as 2017 approached, with investors increasingly feeling like Britain’s economic outlook wouldn’t improve in a hurry.
This week’s Brexit news has also weakened Sterling trade slightly, adding to the uncertainty of the process and indicating that the UK government still had no idea how likely it was that the UK would be able to maintain access to the EU’s single market or even be able to negotiate a transitional Brexit.
Tuesday’s UK ecostats were unable to give the Pound any support due to the low-influence of the prints. The CBI’s December reported sales results beat expectations in both prints but Sterling continued to see poor performance throughout the day.
Euro (EUR) Left Weak by Ongoing Strength in the US Dollar (USD)
While there were more factors at work in the Euro’s movement on Tuesday, the shared currency was also relatively limp and lacked the drive to push GBP EUR down considerably.
Domestically, the Euro was weighed down by ongoing Italian bank jitters as Monte dei Paschi’s attempts to raise money for its debts continued, while the Eurogroup began to consider whether or not to resume Greek debt relief programs after suspending them last week. Helena Smith from The Guardian stated;
‘The hope is that the Euro working group will unblock the debt relief measures it froze last week so that a second review of the economy assessing the headway Greece has made in implementing reforms can be concluded when euro zone finance ministers convene again on 26 January.’
The latest news to strike the Eurozone was a ruling from the French court that IMF head Christine Lagarde was guilty of criminal negligence when approving a large transaction of taxpayer money to French businessman Bernard Tapie.
Due to all these downside factors and the ongoing bullishness of the US Dollar following last week’s Fed news, the day’s Eurozone data was too low-influence to give the shared currency a notable leg-up.
Germany’s producer prices results beat expectations in both prints and avoided an expected contraction year-on-year, instead hitting 0.1%. The Eurozone’s current account surplus also improved in October.
2016 GBP EUR Exchange Rate Forecast to Fall on Wednesday if UK Borrowing Figures Disappoint
There is a lot more movement potential for the 2016 GBP EUR exchange rate on Wednesday as investors will be awaiting the day’s UK public sector net borrowing results.
October’s results revealed that the UK government had been borrowing more money than expected since the Brexit vote, which has worsened hopes that the low value of the Pound would make the UK’s account deficit easier to lighten.
With November’s net borrowing figures expected to be even worse than October’s at 11.6b, a worse-than-expected result on Wednesday is likely to see GBP EUR heading lower in the second half of the week.
This could be prevented if any new Brexit information or news comes out that fills GBP traders with confidence. However, with the back and forth in current single market discussions, investor reactions to ongoing single market rows may be muted.
Over in the Eurozone, Wednesday will see the publication of the bloc’s December consumer confidence results. On Thursday, the European Central Bank (ECB) will publish its final economic bulletin of 2016.
Currently, the Pound Euro exchange rate is expected to fluctuate this week as trade becomes increasingly light towards the holiday period.
However, if Wednesday’s UK public borrowing figures come in below expectations it could be the dataset that leaves the 2016 GBP EUR exchange rate lower this week.