- Euro to Pound Slides to 0.9119 – Pound Euro Hits 1.0963
- UK Brexit Papers Signal Possible Progression for Negotiations – Pound Bolstered
- ECB Minutes Raise Concerns for the Eurozone – Euro Stumbles
The Euro to Pound exchange rate stumbled somewhat at the start of this week on the news that the UK plans to publish more details of its Brexit negotiation strategy (an attempt to address public concerns and progress talks).
The first two papers are due later today, one relates to the trade of goods on ‘Brexit Day (2019)’ and the other will focus on information sharing. These two papers are the first of 5, with the rest due later in the week.
Brexit Secretary David Davis recently promised ‘imaginative and creative solutions’, even asserting that the release of these publications will ‘drive the talks forward’ and demonstrate enough progress to warrant moving onto the next stage of negotiations.
The ‘stages of negotiations’ are somewhat of a contentious subject for the European Commission, who have historically insisted that trade talks cannot take place until the details of Britain’s departure (particularly the proposed ‘exit fee’) have been addressed.
Davis is currently calling on Brussels to change said schedule to allow for trade talks and withdrawal negotiations to take place at the same time, thereby alleviating various anxieties that Brexit will remain behind schedule.
The Pound saw early gains as a result of this sentiment, with an entirely sparse data calendar leaving both currencies vulnerable to political motivations.
ECB Minutes Weigh on Euro (EUR) Exchange Rates
Whilst the Euro remains fluctuating around ten-month highs against the Pound, it did come under pressure towards the end of last week as the minutes from the ECB’s July policy meeting were revealed.
Markets were initially hopeful that the ECB would provide a timeline for the tapering of its quantitative easing programme, particularly with the Eurozone’s economy demonstrating robust growth in the first half of 2017.
Much to the disappointment of investors, however, the minutes instead demonstrated that ECB policymakers remain concerned about the trajectory of the Euro; that it might ‘overshoot’ in the near-term, thereby hampering the bank’s efforts to foster inflation.
This put some pressure on the single currency and could be a small contributor to today’s stumble against the Pound.
EUR GBP Forecast: Volatility on Big Data Ahead
There are no data releases today directly relating to the Euro or the Pound, but the week ahead will see a variety of significant publications. Tuesday will feature the UK’s Public finances report for July, accompanied by public sector net borrowing figures. The Eurozone’s ZEW economic sentiment surveys will also be due out on Tuesday, followed by a number of Markit PMI releases.
Notably, the UK’s gross domestic product (GDP) figure will be released on Wednesday, with slowing growth liable to be Pound-negative. Finally, Friday will feature Germany’s GDP figure, which is expected to remain steady.
Markets will also be studying the progression (or lack thereof) of Brexit talks, especially with the UK’s Brexit papers due to be released throughout the week.