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Mixed Eurozone Data Keeps Euro to Pound Exchange Rate Down from Post-2017 Best

Euro to Pound Exchange Rate Losses Limited as Brexit Fears Dominate Sterling

Following days of sharp losses in the Pound (GBP), the British currency saw a solid rebound yesterday and dragged the Euro to Pound (EUR/GBP) exchange rate back down from its best levels all year. Euro (EUR) demand is limited by Eurozone data.

Since opening this week at the level of 0.8992, EUR/GBP has seen significant gains. EUR/GBP surged at the beginning of the week and touched a high of 0.9183 on Tuesday. This was its best level in almost two years – since September 2017.

EUR/GBP has since slipped slightly from those best levels due to yesterday’s Pound rebound. At the time of writing on Thursday, EUR/GBP trended close to the level of 0.9110.

Various factors including central bank news have made the Euro less appealing, and the Pound could also react to bank news today with the Bank of England’s (BoE) August policy decision set to be held soon.

Euro (EUR) Exchange Rates Struggle to Hold Best Levels amid Mixed Eurozone Outlook

Recent Eurozone data has done little to offset concerns that the Eurozone economy is still seeing economic slowdown, leading to speculation that the European Central Bank (ECB) will introduce further monetary policy easing.

This week so far, a slew of Eurozone ecostats have been published and have largely been too mixed to give markets hope of a sustained recovery.

Yesterday’s Eurozone core inflation data fell short of forecasts, while the bloc’s growth was slightly higher than expected.

This morning’s final July manufacturing PMIs were mixed too. France’s manufacturing PMI came in even worse than projected with a contraction of 49.7, but Germany and the Eurozone’s overall manufacturing contractions were not as deep as projected.

Plus, the data was hardly optimistic overall. On top of this, stronger performance of the Euro’s rival the US Dollar (USD) on Federal Reserve news has also weighed on the Euro.

Pound (GBP) Exchange Rates Rebound in Central Bank Anticipation

Market anticipation for last night’s Federal Reserve news and today’s Bank of England (BoE) policy decision helped the Pound to recover slightly last night, following days of significant weakness.

Sterling saw decent gains on Wednesday evening, reclaiming some of the sharp losses seen at the beginning of the week.

It was due to a combination of factors including month-end fixings, profit-taking, and Central Bank anticipation.

Overall though, the Pound’s recovery was limited and investors predict there may be more weakness ahead for the British currency.

According to Lee Hardman, FX Strategist from MUFG:

‘We are just seeing stabilisation after four very bad days,’

Euro to Pound (EUR/GBP) Exchange Rate Investors Anticipate Bank of England and Eurozone Retail Data

Investors are hesitant to move much on the Pound ahead of today’s upcoming Bank of England (BoE) policy decision.

The bank is not expected to make any changes to monetary policy, but the tone the bank takes in regards to recent UK political developments could be highly influential for the Pound.

If the bank ramps up concerns about Brexit and Britain’s economy, the Pound is likely to see further weakness.

The Euro to Pound (EUR/GBP) exchange rate is on track to end this week higher, but the Euro may struggle to sustain all of this week’s gains if Eurozone data continues to disappoint investors and lead to European Central Bank (ECB) easing speculation.

Most of this week’s notable Eurozone data has been published already, but tomorrow’s Eurozone retail sales report could still be highly influential.

If Eurozone retail sales fall short of forecasts, the Euro to Pound (EUR/GBP) exchange rate could see further late-week losses and limit this week’s gains.