- Euro Pound Exchange Rate Soars to New Highs – Error in Asian trade session thought to blame
- German Industrial Production Impresses – Friday’s UK datasets disappoint
- UK Trade Balance Worsens in August – Low Pound value fails to help ease deficit
- Forecast: German Datasets Due Next Week – Quiet economic calendar for Britain
Euro Pound Exchange Rate News: Euro Strengthened by US Dollar Sell
Friday’s Euro Pound exchange rate news ultimately had a considerable effect on Euro and Pound trade, with Sterling now trending at fresh 2016 lows and struggling to recover from Friday morning’s crash.
Analysts are still unsure of what caused the Sterling crash. Other speculated reasons for its sudden, sharp drop included a faulty automated algorithm, or even an unexpectedly large trade during the market’s quiet hours after the end of Thursday’s American session.
Regardless of its causes, the news caused the Pound significant losses that it has failed to recover throughout the day, despite repeated attempts.
Its recovery attempts against the Euro were limited further in the afternoon, as the day’s highly anticipated US Non-Farm Payroll report failed to meet expectations.
While the news was not disappointing enough to cause a mass-USD selloff, it was enough for the Euro, as the Dollar’s biggest rival, to benefit. As a result, EUR GBP looked to end the week trading near highs not seen in over five years.
(Published 12:45 BST 07/10/2016)
Friday’s Asian session has added a shocking twist to this week’s Euro Pound exchange rate news, as the Pound plummeted in value within moments in what analysts speculate to be a mistaken trade.
As EUR GBP recovered from its worst levels throughout Friday, the latest data failed to support the Pound’s already low demand. As a result, EUR GBP’s recovery was limited and the pair looked to end the week trading near its best levels since 2011.
Euro (EUR) Given Modest Boost as German Data Beats Expectations
The Euro has seen mixed sentiment over the last week, as various datasets underperformed while others beat expectations. As a result, the Euro has fluctuated against some currencies.
However, the shared currency has easily been able to advance against the plunging Pound, as investors sold the British currency throughout the week.
Each of this week’s Eurozone datasets has had at least one piece of news that has helped the Euro hold its ground, including German factory orders and construction figures published on Thursday.
Most recently, Friday morning saw the publication of Germany’s August industrial production scores. These figures came in well above expectations, soaring from -1.5% to 2.5% month-on-month and from -1.3% to 1.9% year-on-year. Reuters reported;
‘German industrial production rose more than expected in August, posting its biggest increase since January and signalling that the sector will contribute to growth in the third quarter.
It posted its biggest monthly increase since January, when output rose by 2.8 percent. This is likely to further ease growth concerns after weak data in July, when industrial production fell by 1.5 percent.’
Pound (GBP) Slumps as Markets Adjust to Sudden Sterling Crash
Sterling plunged against most of its major rivals during Friday’s Asian session after spending most of the week trailing lower on concerns of a ‘hard Brexit’.
In what many analysts are calling a mistaken, or ‘fat finger’ trade, the Pound lost value in a movement that surprised markets and left traders correcting their positions on Friday morning. The BBC reported;
‘It is not clear what triggered the sudden sell-off. Analysts say it could have been automated trading systems reacting to a news report.
The Bank of England said it was “looking into” the flash crash.
The sharp drop came after the Financial Times published a story online about French President Francois Hollande demanding “tough Brexit negotiations”.
“It’s difficult to know exactly what triggered it,” Angus Nicholson, market analyst with IG in Melbourne, told the BBC.’
Sterling attempted to recover on Friday, but struggled as the day’s UK data failed to support it. Industrial and manufacturing production scores for August came in lower-than-expected, slumping in both monthly and yearly prints.
Meanwhile, hopes that the low value of the Pound had made it easier to lighten Britain’s trade deficits were let down once more as August’s trade balance results reported a deepening deficit instead. The total trade balance score worsened to -£4.733b.
Euro Pound Exchange Rate News Forecast: Sterling Could Recover in Quiet Data Week
This week’s Euro Pound exchange rate news has left the EUR GBP exchange rate far higher on the week, but as the pair trades near its best levels since 2011, a reversal of some kind is highly likely in the coming week.
Amid a relatively quiet economic calendar for British data, Sterling will have plenty of breathing room, which may afford traders the time and space to buy the currency up from its cheapest levels.
British economic data from the last week has been generally solid besides Friday’s datasets, with September PMIs coming in well above expectations and causing bets of further stimulus from the Bank of England (BoE) to drop.
As a result, the Pound has solid ground to work from if investors choose to mount a solid recovery. However, Brexit concerns distracted markets from economic news this week and could always do so again next week.
As for the Euro, it is possible the shared currency will be influenced by US Non-Farm Payroll data due for publication in Friday’s American session. Better-than-expected US labour figures could strengthen the US Dollar, leaving its rival the Euro weaker.
In terms of Eurozone data, the coming week will see slews of German data including German trade balance scores, business confidence and September’s Final German Consumer Price Index (CPI) figures.
As it stands, the most important Euro Pound exchange rate news next week will be Brexit concerns and Eurozone datasets.