Euro to Pound Exchange Rate Struggles to Hold Best Levels as Sterling Rebounds
Last week, a slew of disappointing developments in the UK left the Pound (GBP) broadly weak, making it easier for the Euro to Pound Sterling (EUR/GBP) exchange rate to surge throughout. The Euro (EUR) was supported largely by weakness in rivals.
After opening last week at the level of 0.8830, EUR/GBP spent most of the week making solid gains. On Friday, EUR/GBP touched on a high of 0.8956, which was the pair’s best level since November 2017.
EUR/GBP ended last week at the level of 0.8930 and has trended very closely to the week’s opening level since markets opened on Monday morning. At the time of writing, EUR/GBP was trending just slightly lower.
Investors are awaiting notable Eurozone or Brexit news to drive the Euro to Pound exchange rate this week, but amid a lack of notable UK ecostats due for publication investors may simply opt to buy the weak Pound back from its cheapest levels.
Euro (EUR) Exchange Rate Investors Anticipate Eurozone Data amid Rival Weakness
Last week, broad weakness in Sterling was the primary cause of Euro to Pound (EUR/GBP) exchange rate gains. However, the Euro did benefit from weakness in its biggest rival at the end of the week too.
At the end of last week, investors sold the influential US Dollar (USD) from its recent highs in reaction to the latest shocking comments from US President Donald Trump.
On Friday, Trump expressed concern about the strength of the US Dollar as well as accusing China and the EU of manipulating their own currencies. Trump also criticised the Federal Reserve’s recent hiking of US interest rates.
His comments sent a shock through markets, as investors became anxious about the possibility of a currency war, or the possibility that Trump could somehow influence the Federal Reserve’s monetary policy.
As the US Dollar often sees a negative correlation with the Euro, this led to a late-week boost in Euro demand. It came despite last week’s slightly underwhelming Eurozone core inflation results.
Pound (GBP) Exchange Rates Steady Following Week of Losses
Investors had many reasons to sell the Pound last week, as a cocktail of Brexit jitters and economic woes blasted the currency lower.
At the beginning of the week, investors became anxious that the UK government may foil its own Brexit plan if divisions within the party remain deep and UK Prime Minister Theresa May’s leadership remains shaky.
This was followed later in the week by some underwhelming UK inflation and retail sales results, which caused Bank of England (BoE) interest rate hike bets to fall and the Pound to weaken.
While there is still a small majority bet that the BoE will hike UK interest rates in August, many analysts have argued that the bank would likely be within reason to delay a rate hike if it wished to.
As Sterling has tumbled to its worst levels in months against the Euro, investors are hesitant to sell it much more this week. The British currency has steadied as some investors buy it back from its cheapest levels.
Euro to Pound Forecast: Influential Eurozone Data to Drive EUR/GBP This Week
Amid a lack of notable UK ecostats due for publication this week, the Euro to Pound (EUR/GBP) exchange rate is more likely to react to political news and upcoming Eurozone data.
Of course, much of Sterling’s recent weakness has been due to Brexit uncertainties so further Brexit developments would of course have a notable impact on the British currency’s outlook and movement.
In terms of data though, it could be a big week for the Euro. Tuesday will see the publication of Markit’s July PMI projections for the Eurozone, as well as France’s July business confidence figures.
The PMI data in particular will give investors a better idea of how the Eurozone’s economy has performed over the last month.
It will follow with Ifo’s German business data on Wednesday, but the biggest event of the week will be the European Central Bank’s (ECB) July policy decision on Thursday.
If the bank makes any surprising comments or forecasts regarding US protectionism or the Eurozone’s economic outlook it could be highly influential for the Euro to Pound (EUR/GBP) exchange rate.