The Euro Pound exchange rate was holding in the region of 0.8387 as investors looked ahead to the week’s European Central Bank (ECB) interest rate decision. Less-than-impressive German Industrial Production data did little to dim concerns that the ECB may adopt a dovish stance when it gathers on Thursday.
- Euro Pound Exchange Rate News: Euro Down – Pound continues last week’s rally
- August Eurozone PMIs Disappoint – Britain’s August PMIs come in well above expectations
- Final Q2 Eurozone Growth Figures Meet Expectations – Euro slightly sturdier
- Forecast: ECB Meeting on Thursday – Easing unlikely, but dovish tone possible
Euro Pound Exchange Rate News: Euro Sturdies Ahead of Thursday ECB Meeting
The Euro to Pound exchange rate made a more solid recovery on Wednesday, as markets began to speculate that Sterling’s recent advances may have been overvalued.
Data published on Wednesday morning revealed that official Manufacturing production statistics showed a sharper-than-expected contraction in July. Analysts projected a month-on-month score of -0.3%, but the actual figure of -0.9% surprised even these bearish forecasts.
The yearly Manufacturing Production print was expected to come in at 1.7%, but instead scored a low 0.8%.
As the Bank of England (BoE) reaffirmed that its August stimulus package was appropriate and that an August uptick was already forecast, markets began to take a slightly more gloomy look on the UK economy once again.
On the other hand, the Euro found solid footing on Wednesday, with investors readjusting their positions on the shared currency ahead of Thursday’s key European Central Bank (ECB) policy decision meeting.
The ECB is not likely to make any changes to monetary policy or easing measures, but markets could make sharp reactions on the Euro if the bank indicates what is in store for the near to long-term future of the Eurozone’s economic policies.
(Previously updated 8:49 BST 07/09/2016)
Euro Pound Exchange Rate News: Both Currencies Strengthen on Poor US Data
Euro Pound exchange rate news: EUR/GBP declined further at the beginning of the week as investors responded to the UK’s latest upbeat data and some disappointing reports from the Eurozone. The EUR/GBP currency pair is currently trending in the region of 0.8368. With Eurozone growth data ahead, further common currency movement can be expected.
The Euro to Pound exchange rate recovered from its worst Tuesday levels in the afternoon, as a surprisingly poor showing of US data led to yet another US Dollar selloff which bolstered demand for the US Dollar’s rivals.
Both the Euro and the Pound benefitted from this selloff. While the Pound was in a better position due to its recent slews of better-than-expected data, the Euro was also in a decent position due to Tuesday’s relatively solid Eurozone reports.
However, the Euro’s current defenses may not last as Thursday’s European Central Bank (ECB) meeting draws closer.
Wednesday will give the Pound ample opportunity to advance if NIESR’s August GDP estimate beats expectations. It is also possible that speeches from Bank of England (BoE) officials could strengthen Sterling if policymakers such as Governor Mark Carney play up the resilience of Britain’s economy.
On the other hand, the Euro has little in the way of key ecostats and investors may not want to move too drastically on the shared currency ahead of Thursday’s ECB meeting, due to speculation that the bank will hint at further stimulus measures – something which would certainly weaken the Euro going forward.
(Previously updated 12:53 BST 06/09/2016)
Euro Pound Exchange Rate News: Sterling Advance Slows on Tuesday
While the Euro to Pound exchange rate continued to slip on Tuesday morning, Sterling’s advances were more limited with the pair holding above 0.8350.
The Euro may have been boosted slightly by the morning’s Eurozone data, which revealed that Eurozone retail sales had escaped contraction in August by coming in at 51.0, up from July’s 48.9.
Eurozone Gross Domestic Product (GDP) scores for Q2 2016 were also published, meeting preliminary scores of 0.3% quarter-on-quarter and 1.6% year-on-year. After many of August’s figures failed to meet preliminary scores, this news may have boosted confidence slightly.
The Euro to Pound exchange rate may struggle to recover on this relatively low-influence Eurozone data, but it may help the EUR/GBP exchange rate remain above key psychological levels until Wednesday.
(Previously updated 8:57 BST 06/09/2016)
Tuesday’s Euro Pound exchange rate news may not prove as influential as Monday’s, which saw Sterling sustaining yet more gains thanks to a surprisingly solid UK Services report for August. Eurozone stats also disappointed, with Services PMIs unable to meet preliminary results.
EUR/GBP slipped from day to day last week, losing a cent overall. By Tuesday afternoon the pair had briefly hit lows not seen since late July of 0.8353 despite briefly attempting to advance before the publication of Britain’s Services PMI. On Monday afternoon, EUR/GBP trended in the region of 0.8360.
Eurozone Data Continues to Disappoint, Dragging Euro (EUR) Lower
Monday’s session continued August trends for both the Eurozone and the UK, as Eurozone data once again failed to meet expectations.
Hopes that the Eurozone economy was strengthening and could reach growth and inflation targets despite the Brexit-vote increased thanks to July data, leaving the Euro much stronger in early-August.
However, as August data began to publish, the Eurozone’s economic concerns began to surface once again, with markets now believing that the European Central Bank’s (ECB) aggressive stimulus measures from earlier this year may not be working as hoped.
Last week, final August Eurozone PMI reports failed to meet preliminary figures, with Manufacturing coming in at 51.7.
On Monday this was followed up when Markit published its final August Services and Composite report for the Eurozone. Services missed preliminary figures of 53.1, coming in at a low 52.8. As a result, the Composite figure missed its preliminary result of 53.3, printing at 52.9.
Markit Chief Economist, Chris Williamson, commented on the report;
‘The survey data will fuel expectations that the ECB would prefer not to wait before injecting more stimulus into the economy, adding pressure for policymakers to act later this week to help shore up confidence in both the outlook for the economy and the bank’s commitment to its inflation target, even if simply by extending its QE programme.’
However, the Euro was able to hold its ground better later on Monday’s session thanks to unexpectedly high investor confidence for September and strong Eurozone retail sales for July.
Pound (GBP) Continues Relief Rally on Services PMI Rebound
The Pound has been in better standing in the global market over the last week, thanks to a slew of economic data indicating that Britain’s economy has experienced something of a rebound from July’s gloomy downtick.
August’s UK PMI figures from Markit, published since last week, all beat expectations quite considerably, beginning with Manufacturing which was expected to contract but instead scored growth.
The trend continued on Monday when Markit released its report detailing the status of Britain’s services sector throughout the month.
As services are Britain’s primary economic industry, the unexpectedly strong score of 52.9 bolstered demand for the British Pound. This also helped to bring Britain’s Composite PMI score up from July’s 47.5 to 53.6, beating out a projected score of 50.8.
Markit Chief Economist Willamson had this to say about the PMI results;
‘… Although improving on July’s seven-year low, business confidence is still at one of its lowest levels seen over the past four years. Many companies remain worried about the outlook and how the economy will fare in the event of Brexit, suggesting that political and economic uncertainty is likely to prevail in coming months, subduing growth.’
Euro Pound Exchange Rate News Forecast: Final Eurozone Q2 Growth Figures Ahead
This week could shape up to be a big week for Euro Pound exchange rate news, but not necessarily in a good way if key datasets continue to disappoint investors.
Tuesday’s session will see the publication of another slew of Eurozone PMIs, this time German Construction and Eurozone Retail PMIs from Markit.
However, the main attraction of Tuesday’s data will be the Eurozone’s final Q2 Gross Domestic Product (GDP) scores. Currently, Q2 growth is expected to meet preliminary scores of 0.3% quarter-on-quarter and 1.6% year-on-year.
If growth scores beat forecasts, this could bolster Euro demand and even cause European Central Bank (ECB) easing bets to soften slightly. However, this is unlikely.
Britain’s economic calendar, on the other hand, will be relatively quiet until Wednesday which also sees the publication of Germany’s July industrial production results.
UK data due on Wednesday includes industrial and manufacturing production figures for July, but markets will likely focus on NIESR’s August UK GDP estimate.
Looking ahead later in the week is the European Central Bank’s (ECB) September policy decision meeting.
While any action on monetary policy or additional stimulus is currently seen as unlikely, the optimism the bank shows will be vital to Euro movement and will be this week’s biggest Euro Pound exchange rate news.