- EUR GBP Exchange Rate News: Pair Holds Above 0.88 – Weak Sterling allows Euro highs
- Thursday Eurozone Data Mixed – German factory orders impress, Retail PMIs disappoint
- Pound Remains Weak on Brexit Jitters – Holds ground above key psychological support levels
- Update: UK Trade Balance Disappoints – GBP hits new lows due to sudden crash
- Forecast: Sterling Could Recover Next Week – Plenty of breathing room on quiet eco-calendar
EUR GBP Exchange Rate News: Sterling Crash Leaves Euro Higher
Friday’s EUR GBP exchange rate news started off with a shock, as a sudden plummet in Sterling value shook forex markets throughout the day.
Speculated causes for the Pound’s sudden drop in value include a simple mistaken trade, or an error made by an automatic trade algorithm. Regardless, the Pound failed to recover to its Thursday levels by the end of the day.
As a result, EUR GBP ended the week near its best levels in over five years, having experienced its biggest weekly gains since the week of the EU Referendum itself.
(Previously updated 16:51 BST 06/10/2016)
EUR GBP Exchange Rate News: ECB Minutes Fail to Influence Movement
After seemingly slipping from its best levels on Wednesday and Thursday morning as the Pound attempted to recover, the Euro Pound exchange rate extended its 2016 best once more on Thursday afternoon, briefly reaching as high as 0.8851.
The Euro trended sturdily for most of the day despite the morning’s mixed data, and investors used the day’s lack of influential British data as an opportunity to continue the currency’s big selloff.
Minutes from the European Central Bank’s (ECB) latest meeting minutes did little to influence EUR GBP exchange rate news, with markets instead coming to terms with Britain heading for a ‘hard Brexit’.
The ECB’s minutes revealed that despite speculation, the bank still intended to see its Quantitative Easing program through to its natural end rather than end it early.
Friday’s session could give Sterling stronger support if UK data beats expectations. However, any Sterling recovery is unlikely to bring the pair back down to the week’s opening levels.
(Published 11:00 BST 06/10/2016)
Wednesday’s EUR GBP exchange rate news saw the pair fall slightly from its best levels in over five years as the Pound met psychological support. The week’s Eurozone data has been mixed thus far, but the shared currency has kept a weak Sterling at bay.
EUR GBP still trades well over a cent above the week’s opening levels and comfortably trends near its highest levels since 2011. After hitting that high of 0.8837 on Wednesday morning, the pair trended at around 0.8800 on Thursday.
Euro (EUR) Sturdy but Flat on Wednesday and Thursday’s Mixed Data
Euro trade has seen mixed movement in the last few days, making it difficult for the Euro to capitalise on weakness in the Pound. While the shared currency has trended near its best levels versus the British currency, it has been held back by some underwhelming data from the Eurozone.
Wednesday saw the publication of Markit’s final September Services and Composite PMI scores for a slew of key economies, including Germany and the Eurozone as a whole.
Germany’s preliminary score of 50.6 was seen as widely disappointing, so while the final score of 50.9 was slightly encouraging to investors in comparison it still led to the Eurozone’s Composite PMI coming in at a 20-month-low of 52.6.
The Eurozone’s retail sales scores for August also disappointed. While the monthly score saw a lighter-than-expected contraction of -0.1%, the yearly measure slowed right to 0.6%, well below the expected slow to 1.5%.
Thursday’s session saw yet another slew of mixed Eurozone data. Germany’s factory orders scores for August impressed, hitting 1.0% month-on-month and improving from -0.6% to a solid 2.1% year-on-year.
Markit’s German construction PMI improved from 51.6 to 52.4 in September, improving sentiment in German performance. However, the Eurozone’s September retail PMI disappointed by falling from 51 to a contraction of 49.6.
Pound (GBP) Continues to Reel from Brexit-Panic Selloff
Sterling experienced a bearish selloff across the forex market on Monday and Tuesday, as investors expressed their distaste in a ‘hard Brexit’ by selling the British currency in favour of other assets.
A ‘hard Brexit’ is becoming a widely used term to describe the process of Britain leaving the European Union without negotiating any of the EU’s member-state benefits, such as access to the single market.
As the single market is seen as vital to UK trade to many economists, hints of a ‘hard Brexit’ from UK officials as well as the Brexit timetable set to begin before March 2017 have undermined Sterling demand.
Wednesday’s British data was unable to restore much confidence in Sterling despite completing a hat-trick of better-than-expected September PMIs. Services beat forecasts of 52.2 by scoring 52.6, but still slipped from August’s score of 52.9, which weighed on investor sentiment.
While Sterling finally found footing on Wednesday afternoon thanks to new criticism towards the Bank of England’s (BoE) ultra-low interest rates from UK Prime Minister Theresa May, the currency remained limp on Thursday and struggled to extend its recovery.
EUR GBP Exchange Rate News: Britain’s August Trade Balance Figures on Friday
With most of the Eurozone’s key ecostats for the week now published, Friday’s EUR GBP exchange rate news is most likely to cause Sterling to take point.
The Euro and Pound are likely to trend relatively narrowly for the remainder of Thursday’s session, but may break away in either direction in the afternoon if the European Central Bank’s (ECB) latest meeting minutes surprise markets in some way.
Friday morning will see the publication of Germany’s August industrial production scores, which are expected to have escaped contraction.
In terms of British data, Friday will see relatively influential stats such as August’s industrial and manufacturing production prints, as well as August’s update to the British trade balance.
Once again, markets will be interested to see if the low value of the Pound has helped to lighten Britain’s account deficit considerably more than expected.
Later on Friday, NIESR will publish its September Gross Domestic Product (GDP) estimate for Britain. If it scores strongly, it could assist a late-week Sterling recovery.
At the time of writing, the Euro Pound exchange rate trended in the region of 0.8795, while the Pound Euro exchange rate trades at around 1.1370. As it stands, this week’s EUR GBP exchange rate news could see the pair end the week above its opening levels.