Euro to Pound Exchange Rate Tumbles as Sterling Steadies from Week of Mixed Movement
Due to weak Eurozone economic data last week, the Euro to Pound Sterling (EUR/GBP) exchange rate spent most of the week trending lower. While the weekend’s Eurozone news was largely positive though, the pair continued to trend lower this morning.
After opening last week at the level of 0.8654, EUR/GBP briefly jumped to a fresh two-month-high of 0.8679 in the first half of the week before tumbling in the second half and closing near the level of 0.8640.
EUR/GBP is being pressured by a slight boost in Pound (GBP) demand this morning, and the pair is trending closely to a low of 0.8624 – the worst level in a fortnight.
The Euro (EUR) is still generally unappealing due to expectations of slowing Eurozone economic activity, but there is potential for Euro upside if the weekend’s Spanish political developments end up market positive.
Euro (EUR) Exchange Rates Limp as Investors Digest Spanish Election Results
Over the weekend, Spain held its 2019 general election – the third in under four years.
It marked a big shift in power for influential parties, as the major socialist PSOE party won the largest number of seats, and the traditionally powerful conservative party, PP, saw a significant slump in support.
On top of this, the far-right Vox party won 24 seats. It was not as much as analysts expected, but was still the most seats won by any far-right grouping since Spain’s return to democracy in the 70s.
The result largely met analyst expectations, and analysts do expect that the PSOE party will be able to form a coalition and help politics in the nation to calm.
However, the reality of the previous status quo fading continued to cause fresh uncertainty for now, and the Euro remained unappealing this morning.
It followed last week’s slew of disappointing Eurozone ecostats, including confidence figures from France, Germany, and the Eurozone overall.
Pound (GBP) Exchange Rate Rebounds Following Week of Brexit Uncertainties
Last week saw UK Parliament resume from its Easter recess, but despite this there was no sign of major movement or progress regarding the Brexit process.
There are still doubts among analysts that UK Prime Minister Theresa May and opposition Leader Jeremy Corbyn will be able to reach an agreement on any kind of Brexit compromise, as talks are ongoing with little sign of progress.
Investors sold the Pound last week as Brexit uncertainties re-emerged following a brief break, though the currency’s losses were limited by low volatility in Sterling and a lack of actual change in the Brexit outlook.
This is the primary cause of EUR/GBP losses this morning, as the Pound rebounds slightly from the losses seen last week.
Euro to Pound (EUR/GBP) Exchange Rate Investors Await Major Eurozone Data
While movement in the Euro to Pound (EUR/GBP) exchange rate has been mixed and uninspired amid a lack of major surprising news over the past week, major Eurozone data due in the coming sessions could change that.
Tuesday will see the publication of a slew of influential Eurozone ecostats, including German consumer confidence, unemployment, and inflation, French growth and inflation, and Eurozone unemployment and growth.
Following the latest concerns that the Eurozone’s economic slowdown is lasting longer than expected, the Euro could see a big shift in movement if tomorrow’s stats surprise investors.
For example, if the data falls short of expectations, investors will have more reason to sell EUR/GBP lower. If the data boosts hopes of an economic rebound, the Euro would strengthen.
Pound investors, on the other hand, are anticipating developments in Brexit talks.
Any signs of the deadlock shifting, or UK Parliament moving towards new votes on how Brexit should proceed, would influence the Euro to Pound (EUR/GBP) exchange rate.