- EUR low due to USD gains – Risk off situation sees US Dollar weaken Euro
- Pound Sterling slumps as EU Referendum rumbles on – Chances of ‘Brexit’ increase
- UK inflation rate results positive for the Pound – Situation inverse to usual market activity
- Eurozone trade stats out today – UK employment data ahead
Euro Pound (EUR/GBP) Exchange Rate Weakens on UK Employment News
Better-than-expected UK employment figures sent the Euro Pound exchange rate lower as Wednesday’s European session continued.
The Financial Times said of the jobs result: ‘Britain’s employment rate hit 74.2 per cent, the joint highest since comparable records began in 1971, with the number of people in work growing by 55,000 to 31.59m. That increase was slightly lower than the 60k expected, but higher than the 44k increase in the previous rolling three months. The robust numbers, eight years on from the financial crisis, are a welcome boost for the Government as the country heads for a potentially momentous EU referendum.’
After the data was published the EUR/GBP exchange rate fell to 0.7891.
The Euro largely held declines as the European session continued but could experience a reversal of fortunes during the North American session if the Federal Open Market Committee’s policy statement reveals that policymakers are reluctant to adjust borrowing costs until later of the year. Conversely, EUR could drop if the Fed hints at a possible adjustment to borrowing costs in July.
(Previously updated 08:00 15/06/2016)
The Euro has been a poor prospect for investors recently due to global market instabilities, although the Pound has fared little better on the whole.
While the Euro to Pound Sterling (EUR/GBP) exchange rate had gained earlier in the week due to ongoing ‘Brexit’ related concerns, weakness in the EUR/USD pairing later saw the Euro trim its advance against its British peer.
Eurozone Economic News: Mixed Inflation Rate Results Compounded by High USD Appeal
The single currency has dropped against a number of competitors recently, owing to the not entirely positive or negative outcome of the earlier Finnish, Spanish and Italian inflation rate results for May.
An additional influence has been had on the single currency by the April industrial production and employment change results for April and Q1; in both cases, gains have been seen.
A less supportive piece of news has been that the US Dollar has risen prodigiously due to limited appeal in other global markets, which has served to elevate the status of the ‘Buck’ and conversely limit any gains made by linked currencies such as the Euro.
Pound Sterling Unsettled by Ongoing ‘Brexit’ Debate
The Pound has taken some serious knocks to its appeal lately, owing to the continually harmful effect had by the EU Referendum on the appeal of the UK currency.
The latest developments have consisted of polling news; in most cases, recently-released polls seem to point towards an ‘Out’ vote taking place.
Elsewhere, UK inflation recently reprinted without changing; this would usually be a damaging development but owing to the otherwise gloomy circumstances has served to push the Pound up in some areas due to its not-entirely negative nature.
Future EUR, GBP Forecast: Eurozone Trade Data to be Outweighed by UK Labour News
The near-future is expected to bring a number of notable ecostats for both sides of the pairing, although at the time of writing forecasts were for the UK contributions to be more impactful than Eurozone offerings.
In the case of the Eurozone, the soon-to-be-announced April trade balance result is set to influence the Euro; this is expected to dip from €28.6bn to €21.5bn.
The UK will bring claims, unemployment and earnings stats shortly before this; estimates have been for claims in May to rise and the April unemployment rate to remain unchanged. With average earnings including bonuses, a drop is expected.
Recent EUR, GBP Exchange Rates
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7936 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2602 recently.