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Euro Pound Exchange Rate Outlook: Could First Week Under Trump Boost EUR Demand?

The Euro crashed against the Pound last week, though possible global instability this week could reverse that trend.

  • EUR GBP rate dropped from 0.88 to 0.86 last week – GBP EUR rose from 1.13 to 1.15
  • Eurozone news included ECB decision last week – ECB President optimistic about 2017’s challenges
  • Pound thrown into turmoil on Theresa May’s comments – Major gains triggered on Brexit revelations
  • German ecostats in focus for Euro movement this week – UK supreme court decision expected Tuesday

The Pound ultimately benefitted from Theresa May’s statements on Brexit, despite high volatility following the announcement due to investor actions.

Euro Faring against Sterling Worsened Last Week on Soaring Demand for UK Currency

The Euro started last week in high demand against the Pound, but dropped strongly after Theresa May delivered a speech on Brexit.

Offering much-needed clarity on the subject of Brexit negotiations and objectives, the PM confirmed that the UK would leave the single market and that Parliament would get a final vote on the decided-on terms.

Other UK focus was on how future trade would work out; uncertainty arose between EU and UK officials about whether the UK would end up in a ‘race to the bottom’ on corporation tax, or would manage to come to a mutually beneficial arrangement.

From the EU, the main focus was Thursday’s European Central Bank (ECB) interest rate decision and press conference, which respectively saw no rate change from 0% and a cautious but optimistic outlook from ECB President Mario Draghi.

While previous minutes had indicated division about whether to extend quantitative easing, Draghi passed over this news, disappointing investors who were hoping for a more decisive statement on Eurozone economic recovery.

Euro Weekly Forecast: Trump Turbulence could Restore Demand for EUR GBP Trading

One of the biggest influencers on the Euro this week may be President Donald Trump, who will be undertaking his first week in office.

Given how rapidly Trump has spoken of implementing his sweeping reforms, the new President is expected to make some controversial plans in his first few days, which could shatter demand for the US Dollar and boost the Euro as a result.

More concretely, the next major scheduled Eurozone news will be Monday afternoon’s Eurozone-wide consumer confidence flash for January, which previously fell by -5.1 points.

Weekly Pound Predictions: Main Focus on Supreme Court Decision for Possible GBP Influence

For Sterling, the main event will be Tuesday’s Supreme Court Decision, which is expected to show the Government definitively losing control of Article 50 triggering privileges.

This outcome is expected to raise Sterling demand, given that it will imply that Parliament won’t trigger the Article early just to meet with potentially rushed schedules from the Government.

Current Interbank Exchange Rates

At the time of writing, the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.86 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.15.