- Euro British Pound Exchange Rate Weakens – Near 0.86 on Tuesday
- Eurozone Retail PMI Falls in January – Eurozone investor confidence unable to support Euro
- EUR Forecast: German Data Throughout Week – Industrial production on Tuesday, surplus on Thursday
- GBP Forecast: UK Parliament Holds Article 50 Vote Wednesday – UK data quiet until Friday
Euro British Pound Exchange Rate Fluctuates on Tuesday
The Euro British Pound exchange rate continued to trend near the key 0.86 level on Tuesday. Due to broad weakness in both currencies, the pair fluctuated and largely failed to register any significant movement.
Due to the strength of the US Dollar (USD) throughout the day, the Euro was considerably weaker allowing the Pound to cause volatility in EUR GBP.
Sterling, on the other hand, performed poorly in the morning due to investor disappointment that the UK Labour party’s proposed Article 50 amendments had been rejected.
However, later in the day the British currency was strengthened by hawkish comments from Bank of England (BoE) policymaker Kristin Forbes. Forbes suggested she may be willing to vote to hike UK interest rates in the near future in order to stave off inflation, contrasting with BoE Governor Carney’s comparatively cautious tone.
[Previously updated 16:43 GMT 06/02/2017]
Euro British Pound Exchange Rate Sees Modest Losses on Monday
Demand for the Euro British Pound exchange rate improved slightly on Monday afternoon as investors cooled on the morning’s disappointing Eurozone retail PMIs and shifted focus towards a speech from European Central Bank (ECB) President Mario Draghi.
While Draghi took his usual tone of playing down Eurozone inflationary pressures and calling for EU member state fiscal policies to assist in ECB policy, his cautiously optimistic tone boosted the Euro slightly.
Draghi stated that the Euro was not reversible, bolstering hopes that the shared currency had a long term future despite critics believing the currency could collapse.
As a result, EUR GBP was able to hold above the level of 0.86 during Monday afternoon trade.
[Published 12:50 GMT 06/02/2017]
The Euro British Pound exchange rate slipped when markets opened this week after surging last week. Monday’s Eurozone data has disappointed while GBP traders bought the British currency up from its lows.
EUR GBP surged from 0.85 to 0.86 last week, ending the week at its best levels since mid-January. However, the pair dipped back down to 0.85 on occasion during Monday morning trade.
Euro (EUR) Weakened Despite Strong Eurozone Investor Confidence
The Euro slipped on Monday morning in response to early-week Eurozone ecostats, losing out following last week’s strong gains.
Monday’s European session saw the publication of Germany’s January construction PMI, which fell to 52 from 54.9.
What was even more disappointing to investors was Markit’s January retail PMI for the Eurozone. Germany’s print disappointingly fell from 52 to 50.3.
As a result of slowed retail across the bloc, the overall Eurozone retail PMI fell from 50.4 to 50.1. While some of this can be explained due to the expected drop in activity following the holiday season, the result still disappointed EUR traders.
Increased demand for the Euro’s rivals, the Pound and US Dollar (USD), after last week’s selloffs also weakened the Euro on Monday.
The Euro failed to benefit from Sentix’s better-than-expected February Eurozone investor confidence survey. Projected to fall from 18.2 to 16.8, due to the perceived impact of tensions between US President Trump and the EU, the figure merely fell to 17.4.
Pound (GBP) Rebounds from Last Week’s Selloffs
Demand for the Pound improved on Monday as investors bought it up from its lowest levels, following last week’s poor performance from the British currency.
The main downsides hitting the Pound last week were mixed UK PMIs from Markit, as well as the Bank of England’s (BoE) first economic outlook of 2017.
While Britain’s manufacturing PMI performed strongly in January, construction and, notably, services came in well below expectations.
Services were projected to slip from 56.2 to 55.8 but instead slumped to 54.5, worsening concerns that the services sector (responsible for 70% of Britain’s economic activity) would not be able to support UK growth in the coming year as much as it did last year.
The Bank of England (BoE), on the other hand, increased its UK 2017 growth forecast to 2% but indicated that this and strong inflation was still not enough to pressure policymakers to normalise UK monetary policy.
As a result, concerns about Britain’s mid to long-term outlook have worsened. This weighed slightly on the Pound’s Monday recovery.
Euro British Pound Exchange Rate Forecast: Quieter Economic Calendars Ahead
This week is unlikely to see any high volatility in the Euro British Pound exchange rate as the Eurozone and British economic calendars are looking relatively quiet compared to last week’s slew of key data.
In Britain, the most influential news will likely be the latest Brexit developments. With March drawing ever closer, the UK government will be doubling down in action and news is likely to become more regular.
This week alone, UK MPs will continue to discuss and debate the Article 50 bill until Wednesday, when Parliament will hold its final vote on whether or not to pass the bill through to the House of Lords.
The Article 50 bill is highly likely to be passed and will likely not influence GBP exchange rates considerably, but any potential amendments made to be bill before passing may cause excitement in markets.
Over in the Eurozone, German data will take focus for most of the week. December industrial production figures will be published on Tuesday, followed by a trade surplus update on Thursday.
The Euro and Eurozone have come under heavy criticism lately, but some analysts believe the currency bloc is actually quietly outshining even the US economy. Erik Nielsen from UniCredit expressed surprise at the constant negativity towards the Eurozone, speaking to the Financial Times.
The FT highlighted that the Eurozone has seen fourteen consecutive quarters of growth, contrasting with the doom and gloom seen from critics. If Eurozone fundamentals continue to steadily improve, the Euro too may see its support firm and increase.
EUR GBP Interbank Rate
At the time of writing, the Euro British Pound exchange rate trended in the region of 0.86, while the Pound Euro exchange rate traded at around 1.16.