Euro to Pound Exchange Rate Rebounds from Weekly Lows as Pound Trade Remains Pressured
Eurozone data has given investors little reason to buy the Euro to Pound (EUR/GBP) exchange rate in recent sessions, but the pair still rebounded from weekly lows on Wednesday due to persistent weakness in Pound (GBP) trade.
Due to a lack of demand for the Euro (EUR), EUR/GBP slipped from 0.8846 to 0.8821 last week.
The pair was able to hold above last week’s worse levels but still slipped to as low as 0.8757 this morning, before rebounding slightly and trending nearer 0.8834.
EUR/GBP was able to recover slightly despite confirmation that Eurozone inflation had slowed in April.
This was because the Pound continued to be pressured by uncertainty in the Brexit process, as well as the Bank of England’s (BoE) highly cautious outlook on monetary policy.
Britain’s latest job market results were also largely unsurprising and gave investors little reason to keep buying Sterling.
Euro (EUR) Exchange Rate Outlook Little Changed as Inflation Offers No Surprises
The Eurozone data published so far this week has given investors little reason to buy the Euro. It has continued to indicate that Eurozone growth is slowing from last year’s strong performance and that Eurozone inflation remained subdued.
Wednesday saw the publication of April’s final Consumer Price Index (CPI) results from Germany and the Eurozone overall, but the figures largely met forecasts and as a result had no notable impact on Euro trade.
Germany’s monthly inflation rate slowed from 0.4% to 0.4% as projected, while the year-on-year figure remained at the forecast 1.6%.
The Eurozone’s overall inflation results met expectations too. The monthly figure slipped from 1% to the forecast 0.3%, with the yearly figure slipping from 1.3% to 1.2% as projected. The core inflation rate fell from 1% to 0.7% as projected too.
It followed Tuesday’s data, which included Eurozone growth projections and industrial production. Industrial production fell short of forecasts in March, so the Euro hasn’t seen much support.
Pound (GBP) Exchange Rate Strength Limited as Domestic Uncertainties Persist
The Pound has been unable to capitalise on Euro weakness. Last week’s Bank of England (BoE) policy decision continues to weigh on Sterling appeal, and Brexit uncertainties continue to hit headlines.
Last week, the Bank of England left monetary policy frozen, following weeks of speculation on whether a May rate hike was still possible amid disappointing UK ecostats.
The bank also hinted that it could leave UK monetary policy frozen for an extended period of time due to domestic economic uncertainties. This was highly disappointing to investors who had hoped for at least one UK rate hike in 2018.
Continued fissures within the UK government and against opposition parties on how key Brexit issues like the customs union and the Irish border should be handled have also weighed heavily on Sterling.
Euro to Pound (EUR/GBP) Forecast: Speeches from Central Bank Officials Ahead
The remainder of the week is unlikely to see the Euro to Pound (EUR/GBP) exchange rate heavily influenced by data from the Eurozone or UK, as the data due on Thursday and Friday is less significant.
Thursday will see the publication of the Eurozone’s March construction output results, followed by German wholesale prices and the Eurozone’s March trade surplus update on Friday.
Investors may be more likely to focus on upcoming speeches from central bank officials instead.
Thursday will see speeches from European Central Bank (ECB) Vice President Vítor Constâncio and Bank of England (BoE) policymaker Andy Haldane.
If the policymakers show any notable shifts from their respective bank’s current tones, the Euro to Pound (EUR/GBP) exchange rate could see some late-week movement.