- Single currency mixed overall against peers – German positivity comes from ecostats
- French strikes expand into rail and air sectors – Looming danger for Euro 2016 prospects
- Pound Sterling generally poor today – GBP downtrend continues
- Eurozone unemployment and inflation rate stats impress – EUR fluctuates before ECB decision
EUR/GBP Holds Gains as UK Growth Forecasts are Slashed
With UK growth forecasts being cut, the Euro to Pound Sterling exchange rate extended gains on Wednesday.
The UK’s forecast-beating Manufacturing PMI did little to offer the Pound support in light of growing Brexit concerns.
With the European Central Bank’s (ECB) interest rate decision looming, the EUR/GBP exchange rate is likely to experience additional volatility before the weekend.
(Previously updated 17:15 31/05/2016)
The Euro has been a decidedly uncertain prospect for investors so far today, with sizable gains being matched by equally notable losses.
The Pound has been on a more straightforward decline, with the simple shortage of UK domestic data preventing any real advance from taking place.
A poll giving the remain camp a lead in the EU referendum campaign also weighed on demand for Sterling.
The EUR/GBP exchange rate exchange rate has moved between highs of 0.7643 and lows of 0.7571.
Eurozone Economic News: German Support Marred by French Strikes
The appeal of the common currency has been a contentious matter today, with losses consisting of -0.3% against the Polish Zloty (EUR/PLN) and -0.7% against the Australian Dollar (EUR/AUD), alongside gains of 0.2% against the Pound (EUR/GBP) and 0.3% against the Indian Rupee (EUR/INR). This advance against Sterling represents an improvement on last week.
This variety of movement is likely a symptom of the situation in the Eurozone as a whole; while Germany has offered a great deal of support by posting record low unemployment rates, France’s worsening strike situation has limited any overall gains that could be made by the single currency.
In the former case, the 6.1% unemployment rate in May, down from 6.2%, has been the lowest on record since the 1990s, which prompted Federal Labour Office head Frank-Juergen Weise to say:
‘The labour market continues its overall positive development. Employment rose sharply and the demand for labour also increased significantly’.
In the latter, in addition to French energy sector workers striking due to planned labour reforms, rail workers have gone on strike and disrupted transport, with the news that Air France pilots have decided on strike action only compounding the issue.
As something of an ultimatum, the union Solidaires Unitaires Democratiques (SUD) has called for strike action in all 10 Euro 2016 host cities, which could send attendance plummeting and force governments to drop or amend current proposals.
Pound Sterling Slumps on Sole Data Shortfall
The Pound has dipped against most of its peers today, with a slight decline against the Euro (GBP/EUR) being eclipsed by greater losses of -0.4% against the New Zealand Dollar (GBP/NZD) and -0.8% against the Australian Dollar (GBP/AUD).
The Pound has likely been negatively impacted by the day’s only piece of domestic data, which has consisted of the Lloyds business barometer for May falling from 38 points to 32.
Sterling is likely to experience greater movement as the week progresses and the UK’s latest Manufacturing, Services and Composite PMIs are published.
Future EUR, GBP Forecast: Further High-Impact Eurozone News due Shortly, Next UK News out Tomorrow
The near-future will bring the announcement of a number of major Eurozone statistics, starting with the currency bloc-wide unemployment rate result for April; this has been forecast to stagnate at 10.2%.
Announced at the same time will be the annual Eurozone inflation rate estimate and core outcome for May, with improvements being forecast to take place for both fields.
Italian inflation rate and GDP-based data for May and the first quarter is also respectively due this morning, with predictions generally being positive across the board.
The next notable UK data will be tomorrow morning’s nationwide housing prices result for May.
House prices are believed to have increased by 0.3% on the month and 4.8% on the year.
Current EUR, GBP Exchange Rates
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7626 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3115 today.