- British Pound Euro 2017 Exchange Rate Holds Near 1.17 – But fails to break through 1.18 level
- Pound Slips on Friday – Lack of fresh data and profit-taking pressures Sterling lower
- GBP Forecast: Bank of England Meet on Thursday – First BoE policy decision of 2017
- EUR Forecast: Key Eurozone Stats Ahead – Including CPI and GDP results
British Pound Euro 2017 Exchange Rate Slips on Monday
Despite a brief recovery in the early afternoon, the British Pound Euro 2017 exchange rate fell to a new daily low before the end of Monday’s European session.
GBP EUR slipped down to the level of 1.16 amid talks in Cardiff over what role leaders of devolved UK Parliaments will have in Brexit negotiations.
Scotland, Northern Ireland and Wales have pressed UK Prime Minister Theresa May for more say in Brexit negotiations, following comments from May that devolved administrations would not be given key roles in the Brexit process.
Scotland’s position in particular has Sterling traders anxious. Scotland’s First Minister, Nicola Sturgeon, has indicated that if Scotland’s wishes were not addressed in a satisfactory way, she will continue to push for a second Scottish independence referendum.
[Previously updated 13:00 GMT 30/01/2017]
Despite concerns about UK-US trade ties, the British Pound Euro 2017 exchange rate trended comfortably in the region of 1.17 throughout Monday morning.
This was largely because concerns began to grow in the Eurozone about the future of EU trade ties with not just the UK, but also the US as US President Trump continues to firm his stance on stricter border controls.
Over the weekend, Mr. Trump issued a controversial order to block those from multiple Muslim-heavy nations from entering the US for at least 90s days, causing widespread uncertainty in markets, including in the Eurozone, about what could be next on Trump’s stricter than hoped protectionist agenda.
[Previously updated 11:32 GMT 30/01/2017]
The British Pound Euro 2017 exchange rate gained around a cent and a half throughout last week’s trade session due to increased hopes that the UK government would take a firm competitive stance on trade during the Brexit negotiations.
GBP EUR advanced to above 1.17 but failed to surpass the level of 1.18. However, further gains may be possible in the coming week if key Eurozone stats disappoint markets.
Any further Brexit clarity is also likely to cause GBP EUR movement in the week ahead, as is the Bank of England’s (BoE) upcoming interest rate decision.
Given that much of the recently published data for the UK has surprised to the upside, the BoE may adopt a cautiously optimistic tone regarding the UK’s long-term prospects. If it is implied that the next move for interest rates could be a hike rather than another cut, the Pound could surge against peers like the Euro and US Dollar.
Pound (GBP) Sold from Highs after Week of Brexit Anticipation
Last week was a good one for traders, on rising hopes that the UK government would be able to make a success out of the Brexit process.
Early in the week, the UK Supreme Court judged eight to three that it would uphold the High Court ruling that Article 50 must be activated with the approval of Parliament rather than independently by the UK government.
This not only bolstered market hopes that MPs would be able to ratify the conditions under which Article 50 is activated, but also pressured the UK government into announcing that it would publish further Brexit plans for MPs. Markets hoped that this would lead to further clarity on how the early days of Brexit negotiations will go.
However, investors became jittery later in the week. Britain’s Q4 2016 Gross Domestic Product (GDP) report indicated that most of Britain’s recent growth was down to the nation’s services sector alone.
This caused concern that once retail is hit by a spike in consumer prices, UK growth would slow significantly.
As a result of this, as well as profit-taking and anxiety about the weekend’s planned meeting between Theresa May and new US President Donald Trump, the Pound tumbled from its highs on Friday.
Euro (EUR) Benefits from Weaker Rivals
Despite performing poorly for most of the week, the Euro was favoured against the Pound on Friday as Trump jitters worsened and investors returned to the Euro.
Underlying movement in the Euro has been weak in recent days due to underwhelming Eurozone data as well as dovish long-term forecasts for the currency bloc.
The week’s disappointing Eurozone services PMIs and drops in German business confidence held back demand for the shared currency earlier in the week.
Thursday’s solid German consumer confidence report was not enough to bolster sentiment towards the bloc’s economy.
However, on Friday the shared currency was able to benefit from weakness in the US Dollar. Trump anxiety, as well as disappointing US growth stats, caused many traders to move from USD to EUR, allowing EUR to make more solid gains against GBP.
British Pound Euro 2017 Exchange Rate Forecast: Bank of England Meeting Ahead
GBP investors are likely to spend most of Monday’s session reacting to the meetings of UK Prime Minister Theresa May and US President Donald Trump over the weekend, particularly what they will mean for UK and US trade relations going forward.
It won’t be long however until markets are firing up for Thursday’s session, which sees the Bank of England (BoE) hold its first policy meeting of the year.
The bank has focused on making sure monetary policy can accommodate for the potential of economic struggles as Britain edges into the Brexit process.
With Sterling’s drop in value expected to hit high street consumer prices in the early months of 2017, traders still hope for signs that underlying inflation will be enough to pressure the BoE to hike UK interest rates back up from their record lows.
However, the bank has stated in the past that hiking rates may be too risky if the economy begins to struggle during the Brexit process as previously feared. After last week’s GDP report, this concern could be repeated by policymakers.
As for the Euro, the shared currency will be swayed by the large amount of key Eurozone ecostats due for publication throughout the week.
Monday will see the publication of the Eurozone’s preliminary January German inflation results, as well as Eurozone confidence figures from January.
Tuesday is set to be a pivotal day for EUR trade. German unemployment results from January and the Eurozone’s December unemployment rate will be published, as well as France and the Eurozone’s Q4 growth results and lastly projections for January’s Eurozone inflation figures.
If Eurozone data impresses and the Bank of England (BoE) disappoints, it’s likely the British Pound Euro 2017 exchange rate will see a downtrend this week.