Rising EUR/GBP Exchange Rate Caused by Pound Sterling Weakness on Slow Data Day
The latest Eurozone news has consisted of German wholesale price data for June, which has shown rising annual sales but a slowdown on the month.
These data releases are considered ‘low-impact’, so as mentioned above the greater influence on EUR/GBP trading today is a devalued Pound Sterling.
Pound to Euro Exchange Rate Declines as Trump Comments Damage Hopes for Soft Brexit
Pound Sterling (GBP) has fallen in value against the Euro (EUR) today, in the aftermath of US President Donald Trump’s first day of visiting the UK.
Mr Trump alarmed GBP traders by appearing to present Prime Minister Theresa May with an ultimatum – opt for ‘Hard Brexit’ or risk losing a US-UK trade deal.
For context, Hard Brexit is where the UK gains greater independence by separating from most EU institutions.
By contrast, a ‘Soft Brexit’ would keep some of the existing UK-EU ties intact after departure, with the benefit of being less economically turbulent.
The exact comments made by Mr Trump came in an interview with The Sun, where the President remarked that:
‘If they do a [Soft Brexit] deal, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill [a US-UK trade] deal.
‘If they do that, then their trade deal with the US will probably not be made.
‘We have enough difficulty with the European Union. We are cracking down right now on the European Union because they have not treated the United States fairly on trading.’
As Mr Trump’s remarks may have emboldened Brexiters to push for a potentially turbulent Hard Brexit, the Pound has slipped against the Euro and other peers today.
Euro to Pound Exchange Rate Forecast: Are EUR/GBP Losses ahead on BoE Speech?
The EUR/GBP exchange rate is at risk of falling before the weekend, if today’s speech from Bank of England (BoE) policymaker Jon Cunliffe boosts the Pound.
Mr Cunliffe will be speaking at a Cumbria Chamber of Commerce event at noon today and could touch on the BoE’s plans regarding future interest rate hikes.
If he takes a positive stance and backs an imminent rate hike then the Pound (GBP) could rally against the Euro (EUR).
Looking further ahead, any potential Euro to Pound losses could be erased by Monday’s Eurozone trade balance reading for May.
This is predicted to show an expansion of the existing trade surplus, with a rise from €16.7bn to €23.6bn.
The Eurozone has held a trading surplus with the rest of the world since February 2017; another positive reading could boost the Euro to Pound exchange rate.