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Could BoE Help 2017 British Pound Euro Exchange Rate Recover This Week?

  • 2017 British Pound Euro Exchange Rate near 1.14 – Lowest levels since January
  • Last Week’s News: Hawkish Draghi – Euro strengthens as Eurozone deflation risks fade
  • GBP Forecast: Bank of England This Week – Could the BoE also change its tone?
  • EUR Forecast: Eurozone Inflation This Week – Traders hope for underlying inflation to improve

2017 British Pound Euro Exchange Rate Slips on Tuesday Brexit Jitters

While the 2017 British Pound Euro exchange rate lost most of the gains it made on Tuesday, it was able to remain in the region of 1.14 as Eurozone political jitters worsened.

Wednesday’s session will see Pound investors focusing on Britain’s employment stats for the three months into January, particularly wage growth figures.

If wage growth impresses investors, GBP EUR is likely to recover. The Euro will remain weighed down for most of Wednesday amid 2017 Dutch general election jitters.

The vote results of Wednesday’s Dutch election may be announced as soon as Thursday, but the process of forming a government may take far longer.

This will give the Pound more room to recover, especially if the Bank of England (BoE) takes a more hawkish than expected tone in this week’s policy decision.

[Previously updated 12:52 GMT 14/03/2017]

The 2017 British Pound Euro exchange rate plunged on Tuesday, quickly shedding most of its Monday gains after Monday night’s news that the Brexit bill had smoothly passed through both UK Houses of Parliament.

Investors had been hoping that amendments from the House of Lords would be accepted by the rest of Parliament. However, the amendments were cut off in Commons and the House of Lords conceded.

This also meant there was no longer a chance of Brexit being delayed. As a result, many traders were faced with the reality that the Brexit would indeed likely begin before the end of March.

However, the Euro struggled to capitalise on Pound weakness on Tuesday due to rising jitters about Wednesday’s general election in The Netherlands. This left GBP EUR trending above 1.13 for most of Tuesday morning.

[Previously updated 16:52 GMT 13/03/2017]

2017 British Pound Euro Exchange Rate Sees Brief Monday Recovery

The 2017 British Pound Euro exchange rate easily held some gains during Monday’s European session, gaining around half a cent in value and recovering around a third of last week’s losses.

Analysts had been speculating throughout the day on the possibility of the Brexit process beginning as soon as this week. However, UK officials indicated later in the day that Article 50 would likely not be activated until towards the end of March.

This gave the Pound further room to breathe, though it may shed some of its recovery later in the week if UK wage growth figures due Wednesday disappoint investors.

[Previously updated 12:36 GMT 13/03/2017]

When European markets opened on Monday, the 2017 British Pound Euro exchange rate began to recover from the lows of 1.13 seen at the end of last week.

Friday evening saw investors sell off the Pound after a week of Brexit jitters and poor news. On Monday morning markets locked in profit from the British currency’s cheapest levels which saw GBP EUR rising at around 0.4%.

Despite a lack of fresh supportive news, Sterling jumped back from its lows against most majors.

While demand for the Euro itself was still solid against other majors, its failed to hold its ground against Sterling’s recovery as investors became jittery about this week’s 2017 election in The Netherlands.

[Published 06:00 GMT 13/03/2017]

The 2017 British Pound Euro exchange rate saw its second consecutive week of losses last week amid a lack of appeal in the Pound and a surprisingly hawkish European Central Bank (ECB) bolstering Euro demand.

GBP EUR began last week trading at the level of 1.15 but by the end of the week had lost around a cent in value and trended in the region of 1.14.

Pound (GBP) Fails to Benefit from Week’s UK Data

Last week’s UK data included data from the British Retail Consortium (BRC) indicating that UK retail sales slowed for the three months leading into January.

This weakened Sterling for much of the week amid rising concerns that the nation’s retail sector could slow enough from spikes in consumer prices to have a negative effect on UK growth.

As a result of the high uncertainty ahead for Britain’s economy, Sterling was unable to benefit from Friday’s data, even though it indicated the UK trade deficit was far lighter than expected in December and January.

December’s trade balance was revised higher from -£3.3b to -£2.03b and January’s came in at -£1.97b. While the deficit was lighter than expected it also indicated that Britain’s trade balance didn’t budge much in January.

Investors were also disappointed with Friday’s UK manufacturing and industrial production data for January which came in below expectations, despite analysts claiming the figures were nothing to be concerned about. Alan Clarke from Scotiabank stated;

‘Don’t be misled by all the negative signs! In summary, these data for January, the first month of Q1, make me confident that Q1 GDP growth can easily record 0.5% quarter on quarter still and possibly even 0.6%.’

Euro (EUR) Sees Sustained Gains After ECB Draghi Comments

For Euro traders, the main event last week was the European Central Bank’s (ECB) March policy decision. While the bank left monetary policy frozen as expected, ECB President Mario Draghi took an unexpected tone in the following press conference.

The usually dovish Draghi pointed out that the ECB’s statement no longer stressed that the bank would use all available tools to prevent Eurozone deflation. This was because, according to Draghi, deflationary risks had largely disappeared.

This marked a notable shift in tone from the bank which had issued reminders about notable deflationary risks regularly for the last few years.

While Draghi stated that political uncertainty in the Euro bloc remained high and inflationary pressures were still subdued, the press conference overall left Euro traders much more optimistic.

As investors celebrated however, many analysts were careful to note that this did not mark a change in policy stance but were optimistic that things could change in the coming year. According to Neil Wilson, market analyst from ETX Capital;

‘Deflation is no longer the concern for the ECB — prices are not rising fast enough to warrant tapering or higher rates, but the imminent risk of deflation has passed. That’s something of a watershed moment — the end of the beginning in terms of unconventional monetary policy tools perhaps.’

2017 British Pound Euro Exchange Rate Forecast: Bank of England Meet This Week

The 2017 British Pound Euro exchange rate is unlikely to see significant shifts in movement at the beginning of the week unless new Brexit or Eurozone political news comes in over the weekend.

Speculation is mounting that the UK government intends to activate Article 50 and begin the formal Brexit process in the coming weeks and may do so as soon as this week if the Brexit bill safely passes through the Houses of Parliament.

Things are also heating up in the Eurozone, as the Dutch general election 2017 will take place on Wednesday the 15th and the French Presidential race between anti-EU Marine Le Pen and independent centrist Emmanuel Macron tightens.

As for the coming week’s economic events, ZEW will publish March economic sentiment surveys for Germany and the Eurozone on Tuesday, followed by UK and Eurozone employment stats on Wednesday.

The main event will be Thursday’s Bank of England (BoE) policy meeting. If the BoE or Governor Mark Carney indicates a shift away from the recent neutral ‘wait and see’ tone it would indicate that uncertainty is fading and inspire GBP movement.

Thursday will also see the publication of the Eurozone’s February Consumer Price Index (CPI) results. Following last week’s ECB meeting, investors will be hoping for the figure to hint at stronger inflationary pressures in the Eurozone.