EUR/GBP Hits New Multi-Month High after Labour Calls for Prime Minister to ‘Set Record Straight’
The Euro briefly jumped to 0.8019 against the Pound since this morning as Sterling confidence drooped to once more, allowing the Euro to gradually trend upward.
Political developments have been causing a stir this afternoon as the Prime Minister of Iceland asked Iceland’s President to dissolve parliament in respect to ‘Panama Papers’ allegations directed at the PM.
Britain, meanwhile, faces political tensions rising once more as Labour Leader Jeremy Corbyn publically asked UK Prime Minister David Cameron to publish his own tax returns and clear the air regarding concerns of Cameron-family tax evasion.
The Euro to Pound Sterling (EUR/GBP) exchange rate has recovered after yesterday’s brief Pound rally, despite higher-than-expected PMI in the UK’s strongest sector and optimistic HMRC reactions to the #PanamaPapers scandal.
Underwhelming Eurozone Data Unable to Deter Investors, Pound (GBP) Softens
Despite German and Eurozone data printing optimistically last week, with scores at or above expected levels, this week’s releases have been less impressive across the board.
Negative data and market anxiety from yesterday’s ‘Panama Papers’ leak have inspired more muted movement in the shared currency, but positive UK data was also unable to permit the Pound any rallies of its own.
The EUR/GBP pair currently trades up almost 0.2% on this morning’s levels of 0.7985 and is trending in the region of 0.7997. The Pound’s movement against the Euro yesterday seems to be dissipating as the pair slowly re-approaches its weekend high of 0.8007 and its highest point since November 2014.
The current lack of momentum in the pair’s movement may be partially due to various Eurozone releases printing below expectations this morning. This includes German factory orders, showing a year-on-year increase of only 0.5% despite forecasts of a much more bullish 2.2%.
Various PMI releases from France and Germany also printed below expectations, with France’s composite print at 50.0 below forecasts of 51.1, and German composite slightly under its 54.1 forecast with 54.0.
However, Eurozone retail sales scored above expectations, with the annual figure showing a 2.4% increase, up from the previous month’s year-on-year result of 2.0% and despite estimates of only 1.9%.
#PanamaPapers Leak Sets a Tone of Global Market Anxiety
Despite the positive Eurozone retail sales data, movement in the EUR/GBP pair still seems stunted. It is likely that yesterday’s scandalous release of millions of documents, detailing tax evasion methods from the world’s elite, has influenced investors to be hesitant before making sweeping movements in the forex market.
Adding evidence to this reason for the muted market is the anticipated UK Services PMI release. The data printed at 53.7, above forecasts of 53.5 and a whole point ahead of February’s 52.7.
This positive information from Britain’s largest industry sector has also been unable to inspire investors towards the weakened Pound.
A large amount of names of societal and political elites in the ‘Panama Papers’ leak are from Europe, including some members of the Eurozone and even Britain. Some analysts suggest that these big names being under potential fire could cause anxiety and volatility in related currencies.
UK Prime Minister David Cameron’s father, Ian Cameron, is among the names being linked to tax evasion. The public outcry towards elite tax evaders (backed up by HMRC claims of pursuit) as well as calls for David Cameron to solve the UK’s ongoing steel crisis have likely caused considerable stress on the Pound.
Euro to Pound Sterling Exchange Rate Forecast: Data Unable to Influence Decisive EUR/GBP Movement
After reaching an over one-year low against the Euro before the weekend, some investors engaged in profit-taking on the Pound as a new week of trading began.
However, demand for Sterling has eased once more.
Standard & Poor’s have reportedly threatened to downgrade Britain’s AAA credit rating if the nation leaves the EU in June. The UK has enjoyed this credit rating since 1978 and having it struck down would mark a serious blow to the country’s economic reputation.
German industrial production data due tomorrow is tipped to have grown by only 0.4% year-on-year. A higher figure, closer to the previous month’s annual figure of 2.2%, may give the Euro more confidence. German and Eurozone Retail PMI is also due tomorrow morning.
The Euro to Pound Sterling (EUR/GBP) exchange rate currently trends around 0.7997 while the Pound Sterling to Euro (GBP/EUR) exchange rate trends in the region of 1.2504.