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Euro to Pound Exchange Rate Slides as Eurozone Economic Confidence Drops Off

The Euro to Pound exchange rate has risen marginally on the afternoon of 21st February, following key statements from Bank of England (BoE) officials.

BoE policymakers have stated that the UK could see three interest rate hikes over the next three years; this sparked volatility for the GBP/EUR rate.

Although it seems a cautious plan compared to countries like the United States, this was considered a hawkish statement and pushed the Pound higher.

Sterling’s subsequent losses were partly down to profit-taking by traders, as well as a warning about the weak Pound from BoE Governor Mark Carney.

Mr Carney specifically cautioned about GBP depreciation, saying;

‘Depreciations don’t work. They have an economic effect, but they’re not a good economic strategy.

They may be an outcome of various things…but it’s how you make yourself poorer’.

(First published 20th February, 2018)

Sliding Eurozone Confidence Levels Trigger EUR/GBP Exchange Rate Losses

The Euro to Pound exchange rate has dropped by -0.5% today, following the release of disappointing economic confidence readings for February.

The ZEW economic sentiment scores for Germany and the Eurozone have fallen in February, although not to the levels predicted by economists.

This has also seen Euro exchange rates fall elsewhere, particularly in the Euro to US Dollar pairing.

Putting a positive spin on the confidence stats, ZEW President Achim Wambach said;

‘The latest survey results continue to show a positive outlook for the German economy.

The assessment of the current economic situation is still on a very high level and the economy is expected to improve in the coming six months.

Economic growth in Germany is substantially driven by the very good development of both the global economy and private consumption.

Inflation expectations for Germany and the Eurozone have also started to increase’.

Pound to Euro Exchange Rate (GBP/EUR) Rallies on Signs of EU Concessions in Brexit Talks

The Pound has made significant gains against the Euro on the morning of 20th February, rising by 0.5% in the GBP/EUR pairing.

This advance has been accompanied by other Pound exchange rate gains, which have been triggered by hints of a breakthrough in Brexit discussions.

A report from Business Insider suggests that the European Parliament might give the UK ‘privileged’ access to the EU single market.

If accurate, this report indicates a substantial change in attitudes among EU officials and implies that an economically stable ‘soft Brexit’ could be possible.

Euro to Pound Exchange Rate Forecast: Eurozone Consumer Confidence Estimate could Worsen EUR/GBP Trading

The Euro may fall further against the Pound this afternoon, when a Eurozone-wide consumer confidence estimate is released.

The confidence flash for February is predicted to show a decline in the index from 1.3 points to 1.

While this would indicate lower levels of consumer optimism, a positive reading would still be a rare piece of good news on a historically negative index.

Further ahead, the Euro to Pound exchange rate could also be affected by Eurozone manufacturing and services sector PMI readings on Wednesday morning.

Current estimates are for falling composite and services scores, which may mean that trader confidence in the Euro takes a hit at the start of daily trading.

For those looking for the next Pound to Euro movement, it will be worth waiting until Wednesday morning when a number of UK jobs stats are released.

The main one of these will be reported wage growth in December, which is currently predicted to remain unchanged for both monthly readings.

Unchanged levels of wage growth will leave the current UK wage squeeze intact, as the pace of inflation will continue to outstrip the rate of growth for average earnings.

If wages remain flat in December or decline unexpectedly then the Pound to Euro exchange rate could tumble.