- 2017 Pound Euro Exchange Rate Remains Above 1.15 – Slips from highs on Wednesday
- Sterling Kept Buoyed by Inflation News – Markets increasing BoE tightening bets
- UK Retail Sales Strong – But three-month figures still grim
- Eurozone PMIs Impress – Helps push GBP EUR down from highs
- Forecast: Brexit Begins Next Week – Sterling trade could become jittery again
2017 Pound Euro Exchange Rate Falls from Highs on Friday
The 2017 Pound Euro exchange rate fell on Friday as concerns grew that UK retail sales could slow in the coming months, as well as Brexit jitters ahead of next week’s activation of Article 50. As a result, GBP EUR looked to end the week’s European session in the region of 1.15 after falling from 1.16.
If Sterling is jittery throughout the week on Brexit concerns, this may make it easier for the Euro to push GBP EUR from its highs on impressive Eurozone data.
Eurozone data due for publication next week includes March Consumer Price Index (CPI) stats from Germany and the bloc as a whole. German unemployment figures for March will also be published.
[Previously updated 12:53 GMT 24/03/2017]
Demand for the Pound waned on Friday as investors considered analysts warnings that retail sales could still slow in the coming months.
As a result, the 2017 Pound Euro exchange rate was pushed back down to 1.15 easily on Friday after the Eurozone’s preliminary March PMIs from Markit came in above expectations in every major print.
Notably, Germany’s key manufacturing PMI jumped from 56.8 to 58.3, despite being projected to slip to 56.5. Germany’s composite PMI jumped from 56.1 to 57.
France’s PMIs also beat expectations and as a result, the Eurozone’s overall preliminary PMIs saw impressive results. Manufacturing rose from 55.4 to 56.2, services from 55.5 to 56.5 and the composite figure from 56 to 56.7.
[Previously updated 16:28 GMT 23/03/2017]
UK Retail Sales Push 2017 Pound Euro Exchange Rate to 1.16
Despite a brief dip earlier in the day, the 2017 Pound Euro exchange rate spent most of Thursday’s European session trending above the level of 1.16 and its best levels since the beginning of the month.
Investors generally chose to brush over analyst warnings that retail sales could slow again and indulged in a Pound rally.
However, if Friday’s preliminary Eurozone PMIs for March beat expectations, it could give the Euro the momentum it needs to drag GBP EUR down from its weekly highs.
On the other hand, if the Eurozone looks on track to see a worse-than-expected economic performance in March, the Pound Euro exchange rate could end the week near its best levels.
[Previously updated 12:59 GMT 23/03/2017]
The 2017 Pound Euro exchange rate saw another jump in demand on Thursday following the publication of Britain’s February retail sales results.
While the previous month-on-month figure was revised lower from -0.3% to -0.5% and the previous yearly figure was revised down from 1.5% to 1%, the new prints came in well above expectations.
Month-on-month retail sales beat expectations of 0.4% to hit 1.4% in February. Yearly sales beat expectations of 2.6%, climbing to 3.7%.
This briefly bolstered GBP EUR to the key level of 1.16 – its best level since the beginning of March.
However, the pair quickly dropped back from this high once analysts advised caution, with some suggesting retail sales could still fall again in the coming months.
[Published 06:00 GMT 23/03/2017]
The 2017 Pound Euro exchange rate was largely flat on Wednesday morning, but dropped in the afternoon as Sterling cooled from its Tuesday rally. The day’s data was low-influence and investors continued to focus on Britain’s inflation outlook and the Eurozone’s ongoing political developments.
GBP EUR began this week trending at the level of 1.15. Despite a brief drop to 1.14 on Tuesday morning, the pair has recovered to around opening levels but has failed to hold weekly highs.
Pound’s (GBP) Inflation-Inspired Rally Cools Off
Due to a lack of fresh UK news on Wednesday, demand for the Pound slowed throughout the day and caused GBP EUR to fall back to around the week’s opening levels again.
The Pound cooled after its rally earlier in the week. Tuesday saw Sterling put in a strong performance due to the day’s UK inflation stats.
The British Consumer Price Index (CPI) figures from February indicated that the nation’s inflation had surged higher than expectations. Yearly inflation was at 2.3% in February – above the Bank of England’s (BoE) 2% inflation target.
This increased market hopes for tighter UK monetary policy in the foreseeable future, which has also given the Pound some notable underlying support despite its Wednesday slips.
A report published by the BoE on Wednesday had little influence on the Pound, as investors sold Sterling from its weekly highs to make a profit.
The report was of a Q1 2017 survey on UK business conditions. It was mixed and stated what many analysts had already speculated beforehand, which is part of why investors brushed over it;
‘The fall in Sterling was being passed through into higher manufacturing output and consumer goods price inflation. Business and consumer services price inflation had edged higher.’
Euro (EUR) Sturdy on 2017 French Election Hopes
This week has seen relief in Euro trade after political jitters have seen it weaken considerably in recent months.
Markets had been concerned that rising populism politics could lead to big election wins for anti-EU candidates in this year’s general elections throughout the Eurozone.
However, after last week’s general election in The Netherlands and this week’s televised debate for the 2017 French election, concerns of an anti-EU politician withdrawing their nation from the Eurozone have faded slightly.
Monday’s French election debate saw the major candidates of the election race, including Marine Le Pen, François Fillon and Emmanuel Macron, go head to head to discuss the main issues of the election.
According to snap polls following the event, centrist candidate Macron (who is pro-EU) was seen to have put on a strong performance that potentially bolstered his support.
This lightened concerns that anti-EU Le Pen, who has been the favourite to win the election’s first round in recent months, could win the election and withdraw France from the Euro bloc.
As hopes of a smooth victory for Macron in the second round of the election increase, Euro jitters have softened. Investors have seen the Euro as a reliable investment over the last week as a result.
2017 Pound Euro Exchange Rate Forecast: UK Retail Sales Results in Focus
Thursday will be another influential day for Pound Sterling trade, as Britain’s February retail sales data will be published.
Recent retail sales reports have indicated that the retail sector is slowing further than expected, as citizens avoid spending due to the low value of the Pound causing consumer prices to soar.
The retail sector is part of Britain’s services sector, which is Britain’s largest economic sector and makes up a considerable portion of the nation’s Gross Domestic Product (GDP).
As a result, analysts speculate that slowing retail sales could lead to Britain seeing slower economic growth in 2017 than government and Bank of England (BoE) officials have forecast, which would certainly weaken the Pound.
If February retail sales come in well below expectations, the Pound could shed more of this week’s gains. On the other hand, higher-than-expected retail sales could cause GBP EUR to hit new weekly highs.
Thursday’s session will also see the publication of consumer confidence surveys for Germany and the Eurozone bloc. Germany’s April consumer confidence survey from GfK is expected to remain at 10, while the Eurozone’s March survey is projected to lighten from -6.2 to -5.7.
However, this week’s main Euro movement is unlikely to come until Friday, when Markit will publish its preliminary March PMIs for the currency bloc.
If the Eurozone’s economic activity is looking to be better in March than expected, the 2017 Pound Euro exchange rate could fall at the end of the week.