- Euro (EUR) Flat Amid Quiet Data – Little movement on Whit Monday bank holiday
- Pound Strengthens on Lowered ‘Brexit’ Bets – But poor CPI holds Sterling down
- US Dollar Slips on Mixed Data – Empire manufacturing plummets
- Forecast: US CPI Due – Eurozone trade balance also expected
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped on Monday evening after new EU referendum polls were published, with the polls showing a strengthening lead for the ‘Remain’ campaign. On the other hand, the Euro to US Dollar (EUR/USD) exchange rate remained largely flat as Monday saw mixed US data.
EUR/GBP has dropped around -80 pips since Monday’s session and currently trends in the region of 0.7824 after hitting its lowest point in May. EUR/USD currently fluctuates near the week’s opening levels, around 1.1324.
The UK’s upcoming retail sales report could have a notable impact on EUR/GBP volatility as the week progresses.
Euro (EUR) Remains Uninspired after Whit Monday
Eurozone trade was quiet on Monday as various major markets, including the German and French markets, were closed to observe the Whit Monday bank holiday.
As a result, the Euro’s rivals took point in currency movements throughout the day. Before the weekend the Euro was left limp by mixed GDP and CPI releases, which saw German GDP well up while Eurozone GDP slipped.
Investors also remain wary of the shared currency due to improved bets that the European Central Bank (ECB) is likely to be introducing further stimulus measures in coming months.
ECB Executive Board member Peter Praet spoke on Tuesday morning about Eurozone banking, claiming the banking sector faced a profitability shock, Reuters reports.
New ‘Brexit’ Polls Increase ‘Remain’ Bets Despite Different Results
The Pound gained against many of its rivals, including the Euro, on Monday night after several sites and newspapers published their newest EU referendum poll results.
Most vitally for Sterling’s movement appears to be the poll results released by The Telegraph, which indicated that support for the ‘Remain’ camp had risen from 51% to 55% since April’s ORB poll. On the other hand, ‘Leave’ supporters dropped in the ORB poll to 40%.
This contrasts news from The Guardian that the ‘Leave’ campaign is ahead in internet polls. However, it is reflected in the Guardian’s phone poll which puts ‘Remain’ 10 points ahead.
Sterling weakened on Tuesday morning however, as the UK’s April Consumer Price Index (CPI) report was released on Tuesday morning, showing a monthly drop from 0.4% to 0.1% past estimates of 0.3% and a yearly drop from 0.5% to 0.3%.
US Dollar Weakens on Mixed Data and Low Risk
Concerns about the US economy returned this week as bears continued to hedge Fed rate hike bets and Monday’s session saw largely mixed data releases.
May’s Empire manufacturing report printed a shocking drop from April’s score of 9.56 to a contraction of -9.02, well below the forecast 6.50 and a surprise to investors who considered it an indication that US manufacturing was struggling.
NAHB’s housing market index also disappointed by dropping from 58 to 57.3 despite forecasts of improving to 59.
Not all US data was poor however, as the net long-term TIC flows report improved from $72.6b to $78.1b. As a result, the Euro didn’t gain too bullishly against the ‘Greenback’.
Euro to Pound Sterling (EUR/GBP) and US Dollar (EUR/USD) Exchange Rate Forecasts: US Datasets Ahead
With Tuesday remaining a relatively quiet day for Euro data, investors with an interest in the EUR/USD exchange rate a are instead likely to focus on Tuesday’s US data.
The key datasets due for release throughout the day include the US Consumer Price Index (CPI), housing starts, building permits, average weekly earnings and manufacturing production.
The Eurozone, on the other hand, only sees the release of the latest trade balance update which is currently expected to improve from 20.2b to 22.0b. As a result, US Dollar investors are likely to take point in EUR/USD movement today.
EUR/GBP could be set to recover slightly on Britain’s underwhelming CPI, but as some analysts expected a drop in inflation to follow March’s high Easter inflation, the Pound may remain sturdy on decreased ‘Brexit’ bets.
The Euro to Pound Sterling (EUR/GBP) exchange rate trends in the region of 0.7824, while the Euro to US Dollar (EUR/USD) exchange rate trades at around 1.1324.