- British Pound Euro Exchange Rate Holds Above 1.16 – Looks to register gains this week
- Euro Weighed Down by Fresh Eurozone Concerns – Sterling is bought from cheap lows
- GBP Forecast: Article 50 Discussed in Parliament until Wednesday – Likely to pass through smoothly
- EUR Forecast: German Trade Data to Move Euro on Thursday – Friday trade could be quiet
British Pound Euro Exchange Rate Holds at 1.17 on Wednesday
After a strong morning, the British Pound Euro exchange rate trended more flatly on Wednesday afternoon as Brexit jitters began to hit the Pound once again.
As investors anticipated Wednesday evening’s final UK Parliament vote on the Article 50 bill, demand for the Pound faded. Weakness in the US Dollar (USD) also led to an increase in Euro strength.
However, despite its afternoon slip, GBP EUR remained well above the week’s opening levels and is unlikely to shed its gains by the end of the week unless Britain’s Friday trade results are highly disappointing to investors.
[Previously updated 12:46 GMT 08/02/2017]
The British Pound Euro exchange rate surged to 1.17 overnight and was able to hold its ground at that level for much of Wednesday morning amid a lack of news from Britain and the Eurozone.
As Eurozone political concerns persisted, the Pound was able to easily hold near its highs due to higher Bank of England (BoE) rate hike bets following the previous afternoon’s comments from BoE policymaker Kristin Forbes.
Despite analysts suggesting that a hawkish stance from Forbes was not a surprise and should not move the markets considerably, Sterling only weakened slightly from its best levels on Wednesday morning.
[Previously updated 16:39 08/02/2017]
British Pound Euro Exchange Rate Near 1.16 Amid Tuesday Fluctuations
Despite slipping to lows of 1.15 multiple times throughout the day, the British Pound Euro exchange rate remained in the region of 1.16 for most of Tuesday’s European session.
The US Dollar (USD) surged during Tuesday trade, undermining the strength of the Euro and causing GBP EUR to be volatile within a relatively wide region. The Euro has also been weakened by Eurozone political concerns.
Sterling has largely driven GBP EUR throughout the day. Earlier in the day, GBP EUR dropped amid disappointment that the UK Labour party’s proposed amendments to the Article 50 bill had been rejected.
However, later in the European session Sterling was supported by hawkish comments from Bank of England (BoE) policymaker Kristin Forbes. Forbes stated that she would be willing to vote for a UK interest rate hike in the foreseeable future if she feels inflation gets too high.
[Previously updated 08:54 GMT 07/02/2017]
As markets opened on Tuesday, the British Pound Euro exchange rate fell back below 1.15 as investors responded to the news that the Speaker of the House of Commons effectively banned President Donald Trump from addressing Parliament.
According to analyst Josh Ferry Woodard; ‘The Speaker cited grounds of racism and sexism’ for not inviting Trump to address the House of Commons as part of an official state visit that 1.8 million Britons signed a petition in order to prevent. Bercow noted that he was not in a position to stop the US President visiting Britain, but asserted that an address to the Westminster Hall was an “earned honour” not an “automatic right”.’
[Published 6:30 GMT 07/02/2017]
The British Pound Euro exchange rate strengthened on Monday as the Pound was bought up from its cheapest levels, while the Euro was weakened by the latest Eurozone data and comments from ECB President Mario Draghi.
GBP EUR plunged from 1.17 to 1.15 last week, but on Monday was able to recover to 1.16 and remain there throughout the day’s European session.
Pound (GBP) Recovers Amid Lack of Fresh UK News
Demand for the Pound improved on Monday following last week’s Sterling plunge. Investors bought the British currency up from its cheapest weekly levels due to a lack of new bad news over the weekend as well as the weakness of major rival currencies.
This week’s UK economic calendar is quiet, leaving GBP traders largely reacting to the latest Brexit developments. UK Parliament continued to discuss the Article 50 bill on Monday but this did little to influence Sterling movement.
Downside factors remained heavy however, as last week saw the Bank of England (BoE) upgrade its UK growth forecast without indicating that tighter UK monetary policy was on the horizon.
This, as well as Friday’s worse-than-expected UK services PMI from Markit, led investors to fear that Britain’s economic outlook was not likely to see a strong improvement in the foreseeable future.
Britain’s recent growth has been largely due to the nation’s strong services sector, but last week’s services PMI revealed that the sector was slowing further than projected – from 56.2 to 54.5 in January.
Euro (EUR) Weakened by Eurozone Data and Draghi Comments
After performing strongly last week, the Euro slumped on Monday due to the day’s mixed Eurozone ecostats and the latest comments from European Central Bank (ECB) President Mario Draghi.
The most disappointing figures throughout the day were the Eurozone’s January retail PMIs from Markit. These followed up last week’s disappointing December retail sales figures for the currency bloc.
According to Markit’s prints, retail slowed from 52 to 50.3 in Germany in January, while the Eurozone’s print worsened from 50.4 to 50.1.
As a result of growing concerns about the Eurozone’s retail sector, the shared currency was unable to benefit from the day’s German factory orders and Eurozone investor confidence results, which beat expectations.
On Monday afternoon, ECB President Mario Draghi spoke in Brussels to the European Parliament. Despite speculation that inflationary pressures were improving in the Eurozone, Draghi maintained a cautious tone;
‘So far underlying inflation pressures remain very subdued and are expected to pick up only gradually as we go on. This lack of momentum in underlying inflation reflects largely weak domestic cost pressures. The still significant degree of labour market slack and weak productivity developments are weighing down on wage growth.’
Concerns that far-right French Presidential candidate Marine Le Pen has vowed to fight globalisation during her campaign launch has also weakened demand for the Euro this week.
British Pound Euro Exchange Rate Forecast: Article 50 Bill Debates Throughout the Week
The British Pound Euro exchange rate is unlikely to see considerable shifts in movement throughout the week and will instead continue to move in relation to underlying elements due to a lack of influential data in this week’s economic calendar.
UK Parliament will continue to debate the Article 50 bill in detail throughout Tuesday and Wednesday’s sessions before making a final vote on whether or not to pass the bill along on Wednesday night.
It is widely expected that the bill will be smoothly passed into the House of Lords with minimal pushback, which will not change GBP trade considerably, but any amendments could cause some shifts in the Pound.
UK data is unlikely to influence the Pound until later in the week. January’s house price balance results from RICS move GBP on Thursday, or Friday’s UK trade balance results, industrial production figures or manufacturing production figures from December.
Bank of England (BoE) Governor Mark Carney will also make a speech on Thursday evening, which could influence Sterling.
As for the Euro, German industrial production will be published on Tuesday as well as France’s December trade deficit update. Germany’s December trade balance update will come in on Thursday.
The strength of the US Dollar as well as ongoing concerns about this year’s upcoming Eurozone elections also have the potential to influence the British Pound Euro exchange rate this week.
