- Euro rates generally positive despite domestic data – Diverse mix of inflation data came yesterday
- UK currency declines after two days of gains – PM position handover boosted the Pound
- Limbo state saw investor drop-off – Confidence waned as Cameron gave way to May
- BoE Interest Rate Decision due today – Potential for shocking Pound nosedive
The single currency has been a fairly desirable option for investors of late, in spite of the extremely mixed results of yesterday morning’s Eurozone inflation rate stats.
The Pound has slumped overall, with the fact that a new Prime Minister is in place doing little to reassure investors in the long-term.
Eurozone Economic News: Euro appreciates in spite of Mixed Data
The Euro has been in relatively high demand of late, although domestic data has been far from universally supportive.
The June inflation rate stats for a number of Eurozone countries have come in, and although Spain has posted some revised upwards results on the month and the year, Slovakia, France and Italy’s printings have all been unhelpfully mixed across the board.
In Eurozone-wide news, the industrial production stats for May fell on the year and the month, breaching a negative range in the latter field.
Pound Sterling Collapses ahead of Major BoE News
The Pound began the week on a positive footing, after Andrea Leadsom left the Conservative leadership race and Theresa May quickly fell in line to become Prime Minister by Wednesday.
Yesterday, however, the UK currency fell against many of its usual rivals as market focus shifted to anticipating the kind of policies Theresa May would enact after taking over from David Cameron.
While the fact that a new, stability-linked PM was taking the reins should have bolstered Sterling, the fact that May’s cabinet decisions and policy adjustments are largely unknown did little to reassure understandably anxious investors.
Closing off his tenure in the House of Commons, David Cameron said:
‘The last thing I’d say is you can achieve a lot in politics. You can get a lot of things done. And that, in the end, the public service, the national interest, that is what it’s all about. Nothing is really impossible if you put your mind to it. After all, as I once said, I was the future once’.
Future EUR, GBP Forecast: Imminent BoE Decision to Dominate Investor Concerns
The big news of the day will come from the UK at noon, when the Bank of England (BoE) makes its first interest rate decision since the UK chose to leave the EU last month.
Forecasts have been pessimistic on most accounts, with the general consensus being that an interest rate cut from 0.50% to 0.25% or even 0% is a likely outcome.
Should the BoE cut the rate, the Pound can be expected to crash across the board, as even the benefit of a new national leader is unlikely to do much to prevent the appeal of the Pound tanking in the aftermath of such a decision.
From the Eurozone, input will be had over the course of the morning when the Finnish inflation rate stats are due out, along with the Irish inflation rate printings, both for June. Estimates have been mixed across the board.
EUR, GBP Conversion Rates
Yesterday, the Euro was trending at 0.8426 against the Pound (EUR/GBP) while the Pound was trending at 1.8668 against the Euro (GBP/EUR).