- Single currency remains soft on ‘Brexit’ worries – Long-term impacts of UK’s decision continue to be speculated upon
- Pound Sterling sporadic after construction collapse – UK currency roiled by dive into contraction zone
- UK services PMI due tomorrow – Eurozone PMIs and retail sales stats incoming
Euro Holds Gains Vs Struggling Pound
After surging on Tuesday, the Euro Pound exchange rate managed to hold onto gains throughout Wednesday in spite of less-than-impressive ecostats for the Eurozone and some of its largest economies.
The EUR GBP currency pair was trending in the region of 0.8545.
(Previously updated 06/07/2016)
EUR GBP Jumps 1% Today
A below-forecast UK services PMI and expectations surrounding the Bank of England’s (BoE) financial stability report saw the Pound reverse previous gains against the Euro during the local session.
Markit economist Chris Williamson said of the result; ‘The PMI surveys indicate that the pace of UK economic growth slowed to just 0.2% in the second quarter, with a further loss of momentum in June as Brexit anxiety intensified.’
The EUR GBP exchange rate was left trending in the region of 0.8491
(Last updated 17:02 July 4th 2016)
The Euro has been a relatively unstable option over the course of the day, on account of growing uncertainty in how the Eurozone will function without the UK in the EU.
The Pound has actually been a fairly safe bet, despite a major decline coming in the middle of the day that showed that UK construction had fallen into the contraction range in June.
Looking further ahead, tomorrow morning will bring the UK’s positively forecast services PMI printing, while the Eurozone will release a number of mixed forecast retail, services and composite PMIs for May and June.
(Last updated 10:14 July 4th, 2016)
The appeal of the Euro has been limited so far today, with the opening of the week seeing the common currency trending tightly.
The Pound has been faring better overall, with moderate gains being the most common movement for Sterling against its peers.
Eurozone Economic News: Improvement in Spanish Unemployment Rate Fails to Enthuse Investors
The Euro has declined overall against its competitors so far this week, with the only real gains being few and far between. The most notable of the single currency’s losses have been declines of -0.2% against the Australian Dollar (EUR/AUD) and the Pound (EUR/GBP), as well as a greater -0.3% dip against the New Zealand Dollar (EUR/NZD).
Domestic data out of the Eurozone so far has been limited, although generally positive; Spain has posted a drop of -124.3k people for the unemployment change in June, while in the same month the nation has seen a consumer confidence increase from 90.7 to 96.3.
Less supportive, however, has been speculation about Italy’s economic situation; while things seem to have settled in European markets post-‘Brexit’, in Italy, the fact that Italian banks hold a level of debt around 25% of GDP has been deeply concerning.
The overriding fear among investors seems to be that due to the EU Referendum result lowering growth forecasts, Italy may be in for a tougher time of repaying its debts than before, which does little for enthusing investors.
Pound Sterling Appreciates despite Criticism for Osborne Corporation Tax Cuts
The Pound has risen notably against most of its competitors today, in spite of growing concern that planning may not be adequate for a post-‘Brexit’ UK.
The latest development in this vein has been an announcement from George Osborne that corporation tax in the UK will be cut to under 15%. This is part of a plan to make the UK more appealing to investors after the EU Referendum result, though the current instability of the UK economy makes the actual worth of the decision dubious at best.
One critic of the announcement was Pascal Lamy, former World Trade Organisation (WTO) Chief. Speaking to the Financial Times, Lamy said of the news and its relevant to the ‘Brexit’ negotiations that:
‘I’m quite convinced that at the end of the day, if you want a proper balanced win-win relationship in the future, starting with tax competition is not the right way psychologically to prepare this negotiation’.
The Pound has been in relatively high demand of late, scoring gains of 0.4% against the Euro (GBP/EUR), 0.5% against the Hungarian Forint (GBP/HUF) and 0.6% against the Polish Zloty (GBP/PLN).
Future EUR, GBP Forecast: Irish Confidence Score due Shortly, BoE News Out Tomorrow
The next data likely to have an impact on the EUR/GBP pairing will come from the Eurozone, with the announcement of Ireland’s consumer confidence printing for June at noon today. As of writing, this has been forecast positively, with a rise from 98.1 to 99.8 on the cards.
Looking further ahead, tomorrow will bring a Bank of England (BoE) financial stability report, which may offer some clue as to how the central bank will be acting in the future due to ‘Brexit’.
Current EUR, GBP Exchange Rates
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.8356 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.1969 today.