- Euro Pound 2017 Exchange Rate Trends Comfortably Above 0.85 – Weaker USD gives EUR space
- Eurozone Retail Sales Impress – Business confidence also up in December
- EUR Forecast: Eurozone Unemployment Rate Ahead – As well as Sentix investor confidence
- GBP Forecast: Brexit Jitters Expected – Investors await developments from UK government
The Euro Pound 2017 exchange rate edged higher last week as the Euro benefitted from a weaker US Dollar and a slew of strong ecostats. Brexit anxiety returned to hold down the Pound after an experienced UK-EU diplomat quit and claimed the UK government still lacked any cohesive plan.
EUR GBP began the week trending at the level of 0.85 and despite a brief dip to 0.84 in the middle of the week the pair was able to advance past the week’s opening levels by Friday.
Euro (EUR) Benefits from Ecostats, Mixed US Dollar (USD) Demand
The Euro continued to see relatively limited movement last week but was able to advance slightly by the end of the week against Sterling and other major rivals.
Eurozone data published throughout the week supported the shared currency and improved its general performance. This included German inflation and unemployment results, Eurozone inflation projections and impressive services and composite PMI figures from the bloc.
Friday’s Eurozone data gave the shared currency a modest boost. November’s retail sales figures came in at 2.3% year-on-year – beating the 1.8% forecast – and the previous figure of 2.4% was revised up to a strong 3%.
The Eurozone’s December business confidence results also impressed traders. Expected to rise to 0.55, the figure instead jumped from 0.41 to 0.8. Economic and industrial sentiment figures beat analyst consensus too.
EUR also benefitted for most of the week from a weaker US Dollar. Until Friday, the ‘Greenback’ was sold on profit taking, allowing the Euro to strengthen.
However on Friday the US Dollar benefitted from December’s US job market results, limiting the Euro’s strength.
Pound (GBP) Held Back by Persistent Brexit Jitters
Demand for the Pound was limp last week. The British currency began the year on a strong footing, benefitting from a better-than-expected domestic December manufacturing PMI and dragging EUR GBP down to 0.84 before weakening later in the week.
Later in the week, Sterling remained little influenced even by better-than-expected figures from Britain’s biggest economic sector – services. Markit’s services PMI print came in at 56.2 in December, improving from 55.2 and beating expectations of a fall to 54.7.
However, EUR GBP remained dominant because the latest Brexit developments undermined confidence and prompted traders to sell Sterling again.
Last week saw one of the most experienced UK-EU diplomats, Sir Ivan Rogers, step down from his role as Britain’s ambassador to the EU. Upon quitting, Rogers claimed that the UK government still lacked a cohesive Brexit negotiation stance or a competent negotiating team.
These claims sent UK markets into a panic, with under three months until the Brexit process is set to begin, which is why Sterling’s trajectory didn’t improve even after Rogers was quickly replaced with Sir Tim Barrow, a ‘tough negotiator’.
Euro Pound 2017 Forecast: Eurozone Data and Brexit Developments to Move EUR GBP
The coming week’s economic calendar will be comparatively quieter, but the Euro Pound 2017 exchange rate is likely to see similar movement as it has in the past week, as its fundamental trajectory will still be affected by the strength of the US Dollar and Brexit jitters.
Various Eurozone ecostats due in the week ahead include Germany’s industrial production and trade balance figures on Monday, followed by the Eurozone’s November unemployment rate and Sentix’s January investor confidence survey for the Euro bloc.
Towards the end of the week, the Eurozone’s November industrial production figures will be published, as well as the European Central Bank’s (ECB) latest meeting minutes. These publications could all offer the Euro some support and could limit its losses if downside factors persist.
Britain’s upcoming economic calendar will only really see influential data published on Wednesday, including a December Gross Domestic Product (GDP) estimate from NIESR as well as industrial and manufacturing figures.
For the Pound the biggest upcoming event will be UK Prime Minister Theresa May’s announced Brexit speech, at which she aims to ease concerns about the Brexit process to MPs and the populace at large.
Sterling could continue to trend limply on Brexit jitters until this speech takes place, which is expected sometime in January. If the speech fails to impress, Sterling could plunge even further which would certainly give EUR GBP a boost.
However, if the US Dollar surges again ahead of President-elect Donald Trump’s inauguration on the 20th of January, the Euro Pound 2017 exchange rate will face limited movement in the short-term.