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2017 Pound Euro Exchange Rate Slumps Ahead of Theresa May’s Brexit Speech

  • 2017 Pound Euro Exchange Rate Remains at 1.14 – Falls from 1.15 on Thursday
  • German Growth Beats Expectations in 2016 – Resilient German economy impresses
  • GBP Forecast: Supreme Court Result Anticipated – Could give GBP a leg-up when confirmed
  • EUR Forecast: Economic Sentiment Surveys Next Week – ZEW reports could inspire Euro trade

2017 Pound Euro Exchange Rate Fluctuates Near Lows on Friday

The 2017 Pound Euro exchange rate looked to end the week around two cents below opening levels as Friday’s European session drew to a close.

While GBP EUR edged slightly higher towards the end of the day it struggled to comfortably hold above the level of 1.15.

The coming week will be a busy one for Sterling in particular, as besides Theresa May’s anticipated Brexit speech on Tuesday there will also be UK inflation data, unemployment figures and retail sales results throughout the week.

[Previously updated 12:53 GMT 13/01/2017]

Demand for the 2017 Pound Euro exchange has been weak throughout Friday morning thus far. Sterling continues to see limp trade as investors expect bearish movement next week in reaction to UK Prime Minister Theresa May’s Brexit speech.

The day’s Eurozone ecostats didn’t influence GBP EUR trade, but they confirmed that December’s German wholesale price index improved from its previous figures.

If the current downside movement of the exchange rate continues, the pair could hit 1.13 within the coming weeks for the first time since early-November.

[Previously updated 10:45 GMT 13/01/2017]

The 2017 Pound Euro exchange rate dropped back to trending in the region of 1.14 after it was announced that UK PM Theresa May plans to give a speech next week outlining her Brexit plans.

The expectation that investors might not like what May has to say left the Pound reeling.

According to currency analyst Josh Ferry Woodard; ‘Although no further information has been released at this stage, traders opted to sell Sterling on the news because since taking office May’s comments have usually been interpreted as bearish for the UK currency. Only last weekend the PM said that Brexit was not about keeping ‘bits of EU membership’, which brought about another leg lower in Sterling’s post-Brexit depreciation, due to fears that May was planning to forfeit tariff-free single market access in exchange for greater controls on immigration.

EU leaders have repeatedly claimed that if Britain does not agree to the rules of the common market, which include the free movement of people, then it would not be granted full tariff-free access. Investors believe that trade between the UK and the EU could decline if tariffs are imposed. Subsequently, demand for the Pound has decreased whenever government ministers have hinted that immigration would be prioritised over the single market.’

However, if May instead indicates that the UK will be pursuing retaining access to the single market we could see Sterling rebound against peers like the Euro.

[Previously Updated 07:00 13/01/2017]

The 2017 Pound Euro exchange rate ended Thursday’s European session trending lower after exhibiting little movement for much of the day. Investors set their sights elsewhere after Wednesday’s Donald Trump press conference in the US. A lack of fresh Brexit news left Sterling limp.

GBP EUR has now spent most of the week trending in the region of 1.15 after falling from the week’s opening levels of 1.16. However, it’s not all bad for Sterling as the exchange rate has largely held above its multi-month low of 1.14.

Pound (GBP) Lacks Momentum Amid Lack of Fresh Brexit Developments

A lack of new UK ecostats or Brexit developments left Sterling trade relatively flat throughout Thursday’s European session.

Investors continued to hope that the UK Supreme Court would confirm its predicted decision to uphold the High Court’s ruling that Article 50 should be activated through Parliament rather than by the UK government.

The underlying trend for Sterling was still generally bearish due to persistent anxiety that the UK government lacked a cohesive Brexit negotiation plan or negotiation team.

This, as well as Wednesday’s news that Britain’s trade deficit had worsened more than expected, has weighed heavily on Sterling’s advancement chances in the past week.

This also made it difficult for Sterling to take advantage of news that Bank of England (BoE) Governor Mark Carney no longer expected a hard Brexit to have as bad an effect on the UK economy as on the Eurozone’s economy.

Euro (EUR) Demand Improves after Thursday’s Eurozone Publications

Market demand for the Euro improved slightly on Thursday afternoon, but this ultimately led to GBP EUR trending flatly as the Euro limited Sterling’s earlier recovery attempts.

Demand for the Euro was boosted by the day’s publication of Germany’s full 2016 Gross Domestic Product (GDP) results, which beat projections of 1.8% by improving from 1.7% to 1.9%.

Investors were even more impressed by the afternoon’s publication of the European Central Bank’s (ECB) December meeting minutes.

While investors had low hopes for the report, Euro demand improved after it was confirmed that not all ECB policymakers agreed to extend the bank’s quantitative easing (QE) package beyond its originally planned ending date of March 2017.

According to the minutes report;

‘A few members could not support either of the two options that had been proposed, while welcoming the scaling-down of purchases and other elements of the proposals, in view of their well-known general scepticism regarding the APP and public debt purchases in particular.’

This added to investor hopes that the Eurozone was showing signs of recovery and may not need such aggressive easing for much longer. If certain ECB policymakers continue to be against QE lasting until December this will also increase the perceived chances of QE being tapered back in 2017.

2017 Pound Euro Exchange Rate Forecast to see Quiet Trade on Friday Too

Unless sudden developments in Brexit news come in, the 2017 Pound Euro exchange rate is unlikely to see much significant movement or even a change in trajectory by the end of the week.

The only relevant data due for publication on Friday is Germany’s December wholesale price index results, which are unlikely to influence Euro exchange rates notably.

Instead, the same factors are at play on Friday as they were on Thursday. Sterling is most likely to be influenced by potential Brexit developments, especially if it adds to hopes that the UK government may fight for single market access despite the last week’s statements.

The UK Supreme Court is anticipated to be announcing its decision on the UK government’s challenge in the near future, but has confirmed that it will likely give at least 3 working days’ notice of the judgement date.

On the other hand, the Euro could improve its movement towards the end of the week, particularly if global markets cool on their Trump press conference disappointment.

With the Eurozone seeing optimistic news this week and hopes that the European Central Bank (ECB) may be less dovish on monetary policy than expected, upside factors for Euro investment are improving.

As a result, it’s unlikely the 2017 Pound Euro exchange rate will see a firm recovery on Friday and will instead end the week’s trade session relatively close to (or below) its current levels of around 1.15.