- 2017 Pound Euro Exchange Rate Falls to 1.15 – Occasionally dips to 1.14
- Investor Single Market Jitters Continue to Weaken Pound – But Sterling recovers from worst levels
- UK Data Mixed – Trade data poor, production data exceeds forecasts
- EUR Forecast: Euro Could Remain Limp until Next Week – Thursday data fails to offer boost
2017 Pound Euro Exchange Rate Slips Thursday as Investors Await May’s Speech
Despite trending flatly for most of the day, the 2017 Pound Euro exchange rate fell towards the end of Thursday’s European session, dipping to the level of 1.14 once again.
This was partially because the UK government confirmed that Prime Minister Theresa May’s highly anticipated Brexit speech would take place next Tuesday, worsening Brexit jitters as investors expect she will move further away from hinting at single market access.
Demand for the Euro was also boosted on Thursday afternoon due to the European Central Bank’s (ECB) December meeting minutes. The report indicated that while policymakers extended the bank’s quantitative easing program until December 2017, not all members agreed to the extension.
This improved hopes that the Eurozone economic outlook was better than feared and is likely to stoke speculation that the ECB could taper back its easing slightly throughout the year.
(Previously updated 12:47 GMT 12/01/2017)
Thursday morning led to little notable change in the 2017 Pound Euro exchange rate as the pair continued to trend within a relatively tight range of 1.15.
With no significant developments in Brexit developments since earlier in the week, Sterling has fallen limp. Investors were slightly relieved by news that Bank of England (BoE) Governor Mark Carney no longer believes the financial stability risks in Britain to be as big as those in the Eurozone bloc.
However, with other analysts believing Eurozone economic factors were looking up and Germany’s 2016 Gross Domestic Product (GDP) results beating expectations, GBP EUR remained flat.
(Previously updated 16:51 GMT 12/01/2017)
2017 Pound Euro Exchange Rate Fails to see Significant Recovery on Wednesday
The 2017 Pound Euro exchange rate trended largely flatly throughout Wednesday’s European session and saw little movement from the levels seen since midday.
Wenesday’s UK data offered little in the way of lasting support to Sterling trade, as the decent UK production figures were overshadowed by a surprising widening of the nation’s trade deficit to -£4.17b.
After American markets opened in the afternoon, GBP EUR trade slowed even further as investors rushed to adjust their levels on the US Dollar. US President-elect Donald Trump held his first press conference since the election, meaning all eyes were on him for the remainder of Wednesday trade.
(Previously updated 12:45 GMT 11/01/2017)
Towards the latter half of Wednesday’s European session demand for the Pound improved slightly largely due to news emerging that UK ministers expected the Supreme Court to uphold 2016’s High Court ruling on the legality of activating Article 50 without Parliamentary procedure.
The UK government had challenged the High Court decision and had intended to activate Article 50 independently of Parliament.
This had worsened concerns that access to the EU single market would not be a factor in Brexit negotiations. As a result, hopes that UK Parliament may be able to vote on the activation of Article 50 afterall increased hopes that Parliament would vote for single market access to be a key point of negotiations.
This news emerged from The Guardian, but Sterling may not see a more solid rally until the Supreme Court ruling is confirmed.
(Previously updated 10:32 GMT 11/01/2017)
Impressive UK Production Data Fails to Boost 2017 Pound Euro Exchange Rate
The Pound Euro exchange rate remained trading on the cusp of 1.15 on Wednesday as the UK produced a mixed batch of ecostats for November 2016.
While industrial and manufacturing production figures exceeded expectations, the UK’s trade deficit widened significantly more than forecast as a massive surge in imports wiped out the impact of higher export levels.
According to Reuters;
‘While there was a record increase in goods exports to just over 27 billion pounds, imports also hit an all-time of nearly 39.2 billion pounds. Britain’s trade deficit with the EU widened to a record 8.586 billion pounds. Supporters of Britain’s exit from the EU have said the size of the deficit strengthens the country’s hand in the upcoming Brexit negotiations with the rest of the bloc.’
Follow the reports’ publication the interbank GBP EUR exchange rate was trading in the region of 1.1520
[Previously updated 07:30 11/01/2017]
The 2017 Pound Euro exchange rate continued to see poor performance throughout Tuesday’s trade session, but was able to emerge from the morning’s weekly lows by the end of the day as traders finished their Sterling selloffs.
GBP EUR trended over a cent and a half below the week’s opening levels of 1.16 on Tuesday and near the level of 1.14, but the pair recovered from its two-month-low towards the end of the day.
However, with the UK Government’s stance on single market access still far from clear, some experts expect the British currency to fall further still in the weeks ahead as PM Theresa May prepares to activate Article 50 in March.
That being said, the Pound could derive some support today from the UK’s Manufacturing and Industrial Production reports. The data is expected to show that the rate of manufacturing production rebounded from -0.4% to 0.4% in November, while industrial production is believed to have advanced from -1.1% to 0.6%.
Pound (GBP) Remains Limp after Monday’s Selloff
Demand for the Pound remained low throughout Tuesday’s European session, but GBP EUR losses shrank later in the day as investors finished selling the currency and settling on their new GBP short positions.
The reason for Monday’s GBP plummet and its continued slow movement on Tuesday was the weekend’s Brexit comments from UK Prime Minister Theresa May.
May has been criticised for confusing citizens and markets with a lack of clarity on the UK government’s stance on Brexit negotiations. May stated in an interview on Sunday that the government would not simply keep ‘bits’ of EU membership.
The UK government has attempted to calm markets by reasserting that it will aim for the best possible UK-EU trade deal but traders were unimpressed.
With Downing Street officials attempting to prevent panic while maintaining a vague rhetoric, investors are finding Sterling less appealing in the long-term. Speaking to the Financial Times, Saed Abukarsh from Ark Capital Management stated;
“We see greater disorderly exit in the coming months. We were short sterling, now we have more conviction. The longer this takes, the more this looks like a one-sided affair in favour of the EU.”
Despite a lack of fresh supportive UK data in Tuesday, Sterling emerged from its worst levels later in Tuesday’s session as investors took reassurance from news that Jeremy Corbyn, the leader of opposition Labour party, was expected to consistently press for single market access.
Euro (EUR) Demand Mixed Amid Lack of Supportive Stats
Similarly to Britain, the Eurozone saw no fresh datasets published on Tuesday. This left Euro movement relatively limp throughout the day as the shared currency merely reacted to the movements of its peers.
Therefore, as Sterling edged away slightly from its lows throughout the day, the Euro slipped slightly from its best 2017 levels against the Pound.
The Euro had received a slight boost on Monday from the week’s first batch of Eurozone ecostats. This included Germany’s November industrial production figures, which improved from 1.6% to 2.2% year-on-year, as well an impressive January investor confidence result of 18.2 according to data from Sentix.
Investors also appear to be relaxing somewhat on the fear of rising populism in the Eurozone, according to the Financial Times. Stephan Jefferies from JPMorgan stated on the Eurozone’s political outlook;
‘The European political situation is not as bad as people feared, as it currently looks very difficult for any of the noncore parties to get into power’
This, as well as solid Eurozone ecostats and hopes of higher inflation in 2017, has bolstered the mid-term Euro outlook.
2017 Pound Euro Forecast: Slew of UK Data Due for Publication Wednesday
The Pound may finally see firmer support in the form of UK economic data on Wednesday when the bulk of this week’s UK ecostats published.
November’s trade deficit update is expected to worsen quite considerably, from -£1.97b to -£3.5b. This may weaken Sterling if it comes in even lower than expected.
Britain’s November industrial production, manufacturing production and construction output results will also be published. Most of these figures are expected to come in with year-on-year improvements.
The next batch of Eurozone data won’t be published until Thursday, when Germany’s full 2016 GDP figure as well as the European Central Bank’s (ECB) latest meeting minutes will be published.
However as GBP EUR has been largely influenced by Brexit concerns this week, it’s likely these developments will continue to weigh on Sterling demand.
On the other hand, Pound trade could significantly improve if the UK government takes steps to offer significant clarity to its Brexit stance. Regardless, volatility should be expected in the 2017 Pound Euro exchange rate with the Brexit process still swamped with unknowns.