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British Pound Euro 2017 Exchange Rate Outlook: GBP Sees Limited Recovery

  • British Pound Euro 2017 Exchange Rate Falls to 1.16 – But holds above lows of 1.15
  • Cautious Bank of England (BoE) Hits Pound ­– Hopes fade for tighter UK monetary policy
  • GBP Forecast: Further Article 50 Votes This Week – As well as UK trade deficit update
  • EUR Forecast: German Data Across the Week – Euro could hold ground on stronger fundamentals

British Pound Euro 2017 Exchange Rate Flattens on Tuesday

The British Pound Euro 2017 exchange rate fluctuated throughout Tuesday’s European session but generally remained close to the day’s opening levels as Brexit jitters prevented the Pound from advancing too far.

The Pound weakened on Tuesday morning as proposed amendments to the Article 50 bill from Britain’s Labour party were rejected.

However, Sterling strengthened again in the afternoon following hawkish comments from Bank of England (BoE) policymaker Kristin Forbes.

Forbes suggested that if the real UK economy remains solid and continues to improve, she would be willing to support a BoE interest rate hike in the foreseeable future. This bolstered Sterling demand but contrasted with the more cautious view of BoE Governor Mark Carney.

Meanwhile, demand for the Euro was weak throughout Tuesday as concerns grew about the year’s coming Eurozone elections. The strength of the US Dollar (USD) also weakened the shared currency.

[Previously updated 09:00 GMT 07/02/2017]

British Pound Euro 2017 Exchange Rate Fails to Hold Gains

Towards the end of Monday’s European session, the British Pound Euro 2017 exchange rate had slightly slipped from the highs seen in the middle of the day and was trending at the level of 1.15.

The strength of the Euro improved towards the end of the session despite the generally dovish tone of European Central Bank (ECB) President Mario Draghi in his Monday speech.

Draghi once again stated that Eurozone inflationary pressures were very subdued but remained optimistic. He also stated the Euro was not reversible, bolstering hopes about its long-term future.

The Pound, meanwhile, experienced fluctuations as the Speaker of the House of Commons effectively banned President Donald Trump from addressing Parliament.

The GBP EUR exchange rate was trading in the region of 1.1590 on Tuesday.

[Previously updated 12:43 GMT 06/02/2017]

The British Pound Euro 2017 exchange rate recovered from its weekend lows on Monday morning as the day’s Eurozone data disappointed traders while investors also bought up the cheap Pound.

As a result, GBP EUR was able to comfortably hold above the level of 1.16 once again and at lunch time was advancing at a rate of 0.4%.

The most disappointing Eurozone news of Monday was Markit’s January retail PMIs for the bloc. Germany’s retail sector slipped from 52 to 50.3 while the Eurozone’s fell from 50.4 to 50.1.

In the afternoon, GBP EUR traders are likely to focus on a Brussels speech from European Central Bank (ECB) President Mario Draghi. UK Parliament will also be discussing the Article 50 bill at length again this week.

[Previously updated 10:45 GMT 06/02/2017]

The British Pound Euro 2017 exchange rate fell last week as Bank of England (BoE) news and UK data disappointed. A quieter economic calendar in the week ahead means the Pound’s chances of recovering considerably are slim.

GBP EUR began last week trading at the level of 1.17 and spent most of the week below this point despite some brief surges from the Pound. By the end of the week the pair had fallen to 1.16 and as markets reopened after the weekend Sterling had dropped down to 1.1590.

Are further Pound losses ahead? Find out what news you should be tracking this week.

Pound (GBP) Undermined by Trampled Interest Rate Hike Hopes

Despite being sent surging briefly by a strong UK manufacturing PMI last week, the Pound generally performed poorly due to the week’s mixed UK data and in particular the Bank of England’s (BoE) latest policy decision.

The bank left UK monetary policy frozen as expected, leaving interest rates at the record-low 0.25% and keeping the aggressive easing measures introduced after the Brexit vote in place.

Notably, the bank upgraded its 2017 UK growth outlook despite recent concerns that UK growth would slow considerably after the low value of the Pound hits consumers. The growth forecast was upgraded to 2%, a big jump from the previous forecast of 1.4% in November’s BoE meeting.

However, as the BoE left its inflation outlook for the year the same and still showed no intention of tightening monetary policy in the foreseeable future, Sterling was sold off. According to Michael Hewson from CMC Markets;

‘This was a significant surprise as it had been expected that the sharp rise in prices seen in recent months, and still to be felt, would be reflected in the latest inflation forecasts, but the report indicated that the MPC expected CPI to peak at 2.8pc in the first half of next year.’

Once again, the bank took a vague outlook on the future of monetary policy, stating another interest rate cut was just as likely as another hike.

Sterling investors remained disappointed at the end of the week, as Friday’s session saw the UK services sector slow further than expected in Markit’s January PMI – from 56.2 to 54.2. As a result, Britain’s composite PMI for January dropped from 56.7 to 55.5.

Euro (EUR) Supported by Week of Sturdy Ecostats

A full week of better-than-expected economic data from the Eurozone was the primary reason for the Euro’s strong performance last week.

The Euro also benefitted throughout the week due to weakness in the US Dollar as this week’s Federal Reserve meeting disappointed investors and US President Trump continued to unnerve USD traders.

Solid Eurozone data this week included unemployment, Gross Domestic Product (GDP) and Consumer Price Index (CPI) results, which gave the Euro strong fundamental support throughout the week.

As Eurozone inflation projections beat expectations quite firmly, improving from 1.1% to 1.8% and beating out the expected 1.6% figure, markets continued to hope that underlying price pressures were improving at a faster rate in the Eurozone.

Then towards the end of the week, Markit’s finalised January services PMIs for the Eurozone also beat expectations – including in key German and Eurozone prints.

Services for the bloc were expected to slip from 53.7 to 53.6, but instead remained at 53.7. Due to this, the bloc’s composite PMI also beat expectations, holding at 54.4 instead of falling to 54.3.

British Pound Euro 2017 Exchange Rate Forecast: UK Parliament’s Final Article 50 Vote Ahead

As Britain’s upcoming economic calendar is set to be relatively quiet, British Pound Euro 2017 exchange rate investors are more likely to focus on the latest Brexit developments in the coming week.

In Brexit news, the week gets off to a running start as the Article 50 bill to begin the Brexit process will face scrutiny from UK MPs in the Commons throughout Monday and Tuesday. No significant amendments to the bill are expected unless a considerable number of Conservative MPs rebel from the party line.

Then on Wednesday, Parliament will debate the Article 50 bill one more time and finally vote on whether to pass the bill through onto the House of Lords.

It is widely expected that the bill will pass through Parliament without a hitch after last week saw it voted onto the next stage with an overwhelming majority.

If that proves to be the case, Prime Minister Theresa May will be on track to activate Article 50 by the end of March, as initially planned.

As for data, next week will see the publication of Britain’s December trade balance results, as well as Eurozone retail PMI, investor confidence and German trade surplus reports.

Due to the lack of likely supportive factors for the Pound on the near horizon, the British Pound Euro 2017 exchange rate’s upside potential is limited this week, but negative news from the Eurozone could help the Pound edge higher against its European rival.