Uncertainty about Planned Eurozone Unity Measures Leaves EUR/GBP Exchange Rate Flat
This lack of definitive movement comes during a lull of data for the Eurozone and the UK.
In the single currency bloc, traders are focused on a series of upcoming speeches from European Central Bank (ECB) officials which could influence the Euro.
Before these statements, the Euro has been destabilised by the news that a Franco-German agreement on a Eurozone budget may be further off than first thought.
French Finance Minister Bruno Le Maire had recently reported that an agreement was imminent, but the latest signs are that more work needs to be done.
German officials have been reluctant to commit to the budget; if they are still hesitant in the future then the Euro to Pound exchange rate could fall further.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Steady after Number Crunch on NHS Funding
On the other side of the pairing, the Pound (GBP) has failed to make any headway against the Euro (EUR) so far today because of uncertainty about funding plans.
Prime Minister Theresa May has unveiled plans to spend £20bn a year on the NHS to keep the service running, but where this money comes from is not entirely clear.
Chancellor Philip Hammond has reportedly met the news with unease, given his goal of managing the UK’s finances without pushing the country further into debt.
More widely, there is scepticism about the figures behind the £20bn a year sum, particularly a so-called ‘Brexit dividend’ caused by cut payments to the EU.
Euro to Pound Exchange Rate Forecast: Is EUR/GBP Turbulence ahead on ECB Speeches?
The Euro’s (EUR) minor advance against the Pound (GBP) today could be put in jeopardy by a number of speeches from European Central Bank (ECB) officials.
ECB policymakers will be speaking this afternoon, on Wednesday and on Thursday and the majority opinion of these officials could determine Euro movement.
If these officials take a more optimistic stance than President Mario Draghi at last week’s policy meeting, the EUR/GBP exchange rate could rise.
Although the next ECB interest rate hike is still a long way off, policymakers could still give better Eurozone growth forecasts than Mr Draghi.
On the other hand, if the overwhelming outlook is dovish then the Euro could fall back against the Pound, echoing last week’s later decline in the EUR/GBP pairing.
The first UK economic data this week will be Wednesday’s Confederation of British Industry (CBI) industrial orders reading for June.
A higher level of industrial orders is expected to be reported, but GBP traders may be more focused on Thursday’s Bank of England (BoE) interest rate decision.
If BoE officials hint at an interest rate hike coming as soon as August this year, the GBP/EUR exchange rate could improve considerably.
Recent UK data has lowered expectations for an immediate interest rate hike, but the hope is that policymakers might remain optimistic when considering the long-term.