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British Pound Euro Exchange Rate Near 2017 Highs on Election Anticipation

  • 2017 British Pound Euro Exchange Rate Above 1.19 – Can the pair advance towards 1.20?
  • UK General Election Vote Smoothly Passes Through Commons – Election set for 8th June
  • UK Retail Sales Fall – But Pound’s losses limited by weak Euro
  • ForecastFrench Election Round One on Sunday – Could have huge impact on Euro

British Pound Euro Exchange Rate Near Highs Despite Poor UK Retail Data

Demand for the British Pound Euro exchange rate was little changed on Friday. Investors overlooked the day’s ecostats, remaining optimistic on the Pound and wary on the Euro.

Strong Eurozone PMIs for April, published by Markit, were unable to improve demand for the shared currency so close to the first round of the French Presidential election.

If the first round results impress investors on Monday and cause ‘Frexit’ fears to fade slightly, the Euro could soar as it benefits from recent optimistic Eurozone economic forecasts and data.

However, it’s worth noting that very few outcomes will make investors truly optimistic about the French election with so many outcomes still possible – from a ‘market-safe’ pro-EU face-off outcome, to a ‘nightmare scenario’ second round between two anti-EU candidates.

Regardless, when the results of the first round come in, Euro trade will be alight with activity when markets open on Monday morning.

[Previously updated 12:54 BST 21/04/2017]

Despite slipping slightly from its best levels, the British Pound Euro exchange rate trended much closer to its 2017 highs than the week’s opening levels during Friday’s European session.

The Pound’s movement was only slightly weakened by a highly disappointing UK retail sales report, French Presidential election jitters prevented the Euro from capitalising.

UK retail sales were predicted to slow from 1.4 to -0.2% month-on-month in March, but they instead plunged from a revised 1.7% to -1.8%.

Year-on-year retail sales were also poor, slumping from 3.7% to 1.7% rather than the projected slip to 3.4%.

However, GBP investors are overall more optimistic this week due to UK general election news, meaning GBP EUR was able to hold onto most of its weekly gains and trend in the region of 1.19.

[Previously updated 16:43 BST 20/04/2017]

British Pound Euro Slips from 2017 Highs

Thursday saw the British Pound Euro exchange rate fall from its 2017 highs as traders sold the Pound in profit-taking while the Euro benefitted slightly from the latest French Presidential election hopes.

However, while bets of an election win for Pro-EU Macron have increased slightly, the race is still too close to call for most analysts.

As a result, GBP EUR is likely to be highly jittery on Friday, the final market day before the first round of the election on Sunday.

Investors are likely to brush over the Eurozone’s preliminary April PMIs, as France’s future in the Eurozone is far more influential to Euro trade.

Sterling could influence GBP EUR slightly however. If Britain’s March retail sales stats impress, the Pound could test its weekly highs again on Friday.

[Previously updated 12:55 BST 20/04/2017]

Amid a lack of fresh supportive UK data on Thursday, the British Pound Euro exchange rate slipped from its best 2017 levels on Thursday morning.

While investors remained optimistic on Britain’s outlook since the election was announced, the Pound was sold from its highs in profit-taking.

Demand for the Euro also improved which saw GBP EUR fall further from its highs.

Investors are becoming increasingly hopeful that pro-EU centrist, Emmanuel Macron, can win the French Presidential election due to his strong performance in recent opinion polls.

However, the Euro’s movement will be heavily limited until the election is over, as anti-EU candidates Marine Le Pen and Jean-Luc Melenchon still have a chance to win and begin to take France out of the Eurozone.

[Published 06:00 BST 20/04/2017]

The 2017 British Pound Euro exchange rate trended largely flatly on Wednesday but was able to hold most of its Tuesday gains. Investors remained optimistic that the upcoming UK general election would lead to a smoother Brexit for Prime Minister Theresa May’s Conservative government.

GBP EUR has surged from 1.17 to 1.19 this week and has neared its best levels since the aftermath of the Brexit vote in July 2016. The Euro continues to feel pressure from the upcoming French Presidential election.

Pound (GBP) Holds Multi-Month Highs

Wednesday’s European session saw the Pound holding its ground following Tuesday’s massive gains, amid lasting market optimism towards Britain’s upcoming general election.

On Wednesday, the UK House of Commons voted with an overwhelming majority of 509 to allow Prime Minister Theresa May’s proposed early election. 522 MPs voted for the election and only 13 voted against.

As a result, the UK public will indeed be headed to the polls on the 8th of June for the 2017 UK general election – in which Theresa May is predicted to win an even greater majority than the Conservatives already have.

However, as it was already widely expected that MPs would agree to hold an election, the Pound was little affected by Wednesday’s news.

Analysts continued to comment on this week’s Pound strength. Kathleen Brooks from City Index gave her reasoning for the Pound’s good performance;

‘In and of itself the UK election shouldn’t be a key driver of UK asset prices, particularly if Theresa May wins a landslide, as she is expected to do. This election shouldn’t change domestic policy too much, and Brexit was going to happen with or without the vote on June 8th. However, if the polls are to be believed about the Tory lead over Labour then this election could add certainty to the UK’s Brexit positioning stance and to domestic policy for the next 5 years, and that is good for markets.’

Euro (EUR) Limp as Eurozone Inflation Meets Expectations

Demand for the shared currency was largely unchanged on Wednesday. French Presidential election jitters kept pressure on the Euro, making it easier for the Pound to hold it at bay.

As the first round of the French Presidential election nears, market concerns remain high that an anti-EU candidate, Marine Le Pen or perhaps even Jean-Luc Melenchon, could make it through into the second round of the vote.

If either candidate were to win the election, the Euro would plummet and markets would begin to bet that a ‘Frexit’ is on the way. Similar things will happen if both Le Pen and Melenchon somehow make it to the second round of the vote.

While investors focused on this week’s UK election news and the upcoming French presidential election vote, Wednesday’s Eurozone Consumer Price Index (CPI) results were largely overlooked.

The Eurozone’s March inflation stats met expectations in all major prints. Monthly inflation rose from 0.4% to 0.8% as forecast, while yearly inflation slowed from 2% to 1.5% as projected.

2017 British Pound Euro Forecast: Quiet Trade Likely on Thursday

While Thursday will see the publication of the Eurozone’s preliminary April consumer confidence data, the British Pound Euro exchange rate is unlikely to see much movement until Friday.

Sterling is now on track to end the week higher against the Euro and most other major currencies.

Ignoring the low possibility of a major polling upset, UK Prime Minister Theresa May’s Conservative party looks set to increase its Parliamentary majority in the June 8th election, potentially leading to a much smoother Brexit process.

This expectation alone has notably improved the long-term Pound outlook and as a result any Sterling losses later in the week are unlikely to cause GBP EUR to fall back to the week’s opening levels.

Britain’s March retail sales results are expected to slow when they come in on Friday, but if they come in well below expectations the Pound could fall back slightly from its weekly highs.

Friday’s data also includes the Eurozone’s preliminary April PMIs from Markit.

However, even if these results impress traders the imminence of the first round of the French election this coming Sunday will keep the Euro pressured. This means the 2017 British Pound Euro exchange rate will likely continue to see strong performance until next week.