EUR/GBP Plummets as Investor Bets Against ‘Brexit’ Continue
- Euro (EUR) Largely Limp During Whit Monday – Germany and France observe bank holiday
- British CPI Disappoints – Causes sluggish Pound movement on Tuesday
- Update: Sterling (GBP) Sentiment Bullish – ‘Brexit’ bets drop again causing Pound rally
- Update: Eurozone CPI Uninspiring – Expected figures reveal April deflation
- Forecast: ECB Minutes on Thursday – Central bank to inspire EUR/GBP movement
The Euro to Pound exchange rate plummeted on Wednesday’s session after a new poll released by Ipsos MORI revealed a strong lead for the EU Referendum’s ‘Remain’ campaign. The poll revealed an 18-point lead for ‘Remain’ voters at 55%, while ‘Leave’ trailed at 37%.
At the time of writing, EUR/GBP was down around -1.4% and trended in the region of 0.7715 after hitting a three-month-low of 0.7712.
The poll data followed the release of Britain’s latest slew of employment figures. Unemployment remained at 5.1% while the amount of jobless claimants slipped to 2.1% from a revised figure of 2.2.
Meanwhile, the Eurozone’s final April Consumer Price Index (CPI) report revealed that monthly figures scored 0.0%, while the yearly print revealed a deflation of -0.2%. This marks the second month of deflation in 2016, which put pressure on the already weak Euro.
If the minutes from the last European Central Bank (ECB) policy meeting indicate that the central bank is considering deploying additional stimulus measures to help bolster the Eurozone’s recovery the Euro to Pound Sterling exchange rate could extend losses in the hours ahead.
EUR/GBP Slips as ‘Brexit’ Bets Continue to Wane
The Euro to Pound exchange rate dipped on Tuesday as the weak Euro was easily pushed back by a temporarily bullish Pound.
New ‘Brexit’ polls released on Monday afternoon indicated that the amount of ‘Remain’ voters had increased since April. As a result, ‘Brexit’ bets decreased and Sterling advanced.
However, the Euro was able to recover slightly on Tuesday after poor a UK Consumer Price Index (CPI) report put pressure on the Pound. The Office for National Statistics (ONS) cited increased air fares and lower clothing prices for April’s low inflation results.
By Wednesday however the Euro had fallen back against the Pound ahead of the publication of UK employment figures and the Eurozone’s inflation numbers.
Positive average earning’s data for the UK could send the Pound higher still.
The EUR/GBP exchange rate was trending in the region of 0.7799 on Wednesday
The Euro to Pound Sterling (EUR/GBP) exchange rate was largely flat last week until ‘Super Thursday’ bolstered Pound sentiment. The pair’s flatness looks to continue this week as mixed Eurozone data has left the Euro uninspired.
Since markets opened for Monday’s session, EUR/GBP has fluctuated narrowly, hitting a low of 0.7869 and a high of 0.7889. At the time of writing, the pair showed no real indication of directional movement and trended in the region of 0.7880.
Euro (EUR) Remains Limp After Friday’s Mixed Data
The Euro failed to inspire investors during Friday’s session, which saw the release of a slew of vital Eurozone data including Gross Domestic Product (GDP) and Consumer Price Index (CPI) reports.
German datasets included final April CPI, which met forecasts of -0.4% month-on-month and -0.1% year-on-year respectively.
German Q1 GDP, on the other hand, was largely impressive with all major scores beating out investor expectations. Quarterly growth more than doubled from 0.3% to 0.7%, while the YoY score improved from 1.3% to 1.6%.
Unfortunately, general Eurozone GDP disappointed investors by failing to hold at previous levels. Quarter-on-quarter growth slowed from 0.6% to 0.5% and year-on-year growth slipped from 1.6% to 1.5%.
The single currency also experienced little to no movement on Monday, as the markets of major Eurozone players Germany and France were closed to observe the Whit Monday bank holiday.
Pound (GBP) Slips as ‘Super Thursday’ Bullishness Runs Out
A relatively quiet economic calendar on Friday and Monday made it difficult for the Pound to continue a rally it began in response to the Bank of England’s (BoE) ‘Super Thursday’ trio of announcements.
The Pound rallied last week due to the central bank’s unanimous confidence that an interest rate cut was not necessary despite ‘Brexit’ concerns already negatively affecting UK businesses.
Monday’s mixed Rightmove house price report showed a monthly slowing from 1.3% to 0.4% while the yearly score improved slightly from 7.6% to 7.8%.
Unfortunately, as ‘Brexit’ rows continued, this light data was unable to keep Sterling strong and the currency’s bullishness wore off.
The latest in the waging battle between the EU referendum’s ‘Leave and ‘Remain’ campaigns includes a speech made by Chancellor of the Exchequer George Osborne alongside ex-MPs Ed Balls and Vince Cable.
According to the BBC, the would-be opponents expressed solidarity towards remaining in the European Union due to the potential £200b cost of trade tariffs for an EU-less Britain.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: UK Inflation Report Due Today
Tuesday’s session is due to be more eventful for the EUR/GBP pair as major Eurozone economies, Germany and France, reconvene after Whit Monday.
The most vital dataset due for release throughout the day is expected to be Britain’s April Consumer Price Index (CPI) report. Due to recent concerns for the future of the British economy and the effects of ‘Brexit’ uncertainty, investors hope that scores print better-than-expected.
Currently, the monthly score is expected to slow to 0.3% from March’s 0.4%, while the yearly score is estimated to hold steady at 0.5%.
Eurozone data is set to be quiet in comparison and the Pound is likely to take focal point in any EUR/GBP movements, but March’s Eurozone trade balance update could inspire some confidence in the shared currency if it prints better than forecasts of 22.0b.
Wednesday is also expected to be a busy day for the Euro and Pound, with British employment data due for release in the morning, followed by the Eurozone’s final April CPI scores shortly afterward.