- Euro Pound Sterling Rate Falls to 0.88 – Sterling recovers from Tuesday drop
- Election Fears Weaken US Dollar to Euro Benefit – Eurozone data provides support
- Bank of England Leaves Rates Frozen – Upgraded UK forecasts boosts GBP
- EUR Forecast: Euro to Strengthen from US Dollar – US election next Tuesday
Euro Pound Sterling Exchange Rate Continues Slide on Friday
Despite the morning’s decent Eurozone stats, the Euro Pound Sterling exchange rate continued to tumble lower throughout Friday trade, hitting a new three-week-low of 0.8859 before European markets closed for the week.
News that Germany’s services index had outperformed preliminary figures in October, reaching 54.2, kept the Euro afloat. The Eurozone’s overall scores printed below expectations, with services PMI scoring 52.8 and composite PMI printing at 53.3.
Ultimately these results didn’t influence Euro trade considerably, with other factors such as lingering demand for the Pound and focus on the US election driving Friday’s currency movement.
(Previously updated 12:29 GMT 04/11/2016)
The Euro Pound exchange rate struggled to recover on Friday morning. Sterling was able to hold onto some solid sentiment from Thursday’s rally, while the day’s Eurozone data was not impressive enough to send the shared currency surging.
Markit’s final October Services PMI for the Eurozone bloc were published in the morning, but unfortunately many of the results failed to meet preliminary scores.
However, as the economy was revealed to have continued growing at a sturdy pace, market sentiment towards the Euro was relatively solid.
(Previously updated 16:34 GMT 03/11/2016)
Euro Pound Sterling Ends Thursday Lower
The Euro failed to recover much against the Pound’s Thursday surges, leaving the Euro Pound Sterling exchange rate ending the day – and likely the week – well below opening levels.
While it is possible for Sterling’s bullishness to soften on Friday and allow the Euro to recover, EUR GBP is unlikely to return to the week’s opening levels of over 0.90 after Thursday’s plunge.
Friday will see the publication of the Eurozone’s final October services and composite PMIs. Analysts expect Italy’s scores to beat projections, which may boost the bloc’s scores as a whole. If so, a modest Euro recovery may be supported on Friday.
(Previously updated 14:07 GMT 03/11/2016)
While the Euro Pound Sterling exchange rate recovered slightly from its worst levels in the early afternoon, Sterling continued to sustain over 1% of its daily advances as news continued to support the British currency.
Investors were also cheered at midday by the latest Bank of England (BoE) monetary policy decision, at which officials chose to leave policy frozen, easing fears of further stimulus in November.
The bank also offered some joy to some investors by increasing its 2016 and 2017 GDP and CPI estimates. However, Sterling’s gains may have been slightly limited by continued indications that inflation spikes would likely not cause the bank to go back on loose monetary policy.
(Previously updated 11:07 GMT 03/11/2016)
Euro Pound Sterling Rate Plunges as High Court Rules MPs Must Vote on Article 50
Thursday morning saw the High Court finally make its ruling on the legality of the UK Government activating Article 50 (the formal Brexit process) without a vote in Parliament.
Sterling soared in response to news that the High Court deemed it unconstitutional to activate Article 50 without a say from Parliament. As a result, EUR GBP plunged by over -1% and trended around the level of 0.89.
According to the Press Association;
In one of the most important constitutional cases in generations, three senior judges ruled the prime minister does not have power to use the prerogative to trigger Article 50 of the Lisbon Treaty to start the UK’s exit from the European Union – without the prior authority of Parliament.
The UK Government is expected to challenge the decision in the Supreme Court. The potential outcomes for this include the delaying of Article 50’s activation as well as a vote from MPs on the terms of a Brexit vote. As a result of this news, Sterling could perform better until later in the week.
(Previously updated 9:19 GMT 3/11/2016)
The Euro Pound Sterling exchange rate slipped slightly from recent highs late in Wednesday’s session, as investors prepared for Thursday’s key Bank of England (BoE) meeting.
Analysts do not expect monetary policy to be altered, leaving the Pound a little more bullish. As a result, EUR GBP briefly fell below the key level of 0.90 once again on Wednesday afternoon despite upside factors in Euro trade.
However, with a High Court ruling on whether or not the government is able to begin the formal process of leaving the European Union without the consent of Parliament due this morning, we can expect EUR GBP exchange rate movement in the hours ahead. If the challenge is upheld the Pound is liable to climb, but a rejection would allow the Euro to gain on its British peer.
According to the BBC, the argument is that ‘there is an established constitutional convention for the executive to use ancient powers of royal prerogative to withdraw from international treaties – and that the referendum result has given ministers the green light to begin Brexit.But the claimants – led by investment manager Gina Miller – argue that rights granted by the 1972 European Communities Act cannot be taken away without the explicit approval of Parliament. A number of MPs have also been calling for Parliament to be given a vote before Article 50 is triggered, saying the government has no mandate to decide the terms of Brexit. But Mrs May has said their demands are akin to trying to “subvert democracy”. The government has said it is likely MPs will get to vote on the final Brexit deal reached after the negotiations – but campaigners say this is too late.’
Euro (EUR) Holds Ground as US Dollar Weakens
Demand for the US Dollar has plummeted this week as the November 8th US Presidential election approaches and anxiety over its results spark jitters throughout the foreign exchange markets.
As Euro US Dollar is the world’s most commonly-traded currency pairing, EUR has been one of the currencies to benefit most from this drop in USD sentiment, besides other ‘safe haven’ currencies like the Yen and Swiss Franc.
The shared currency was also bolstered slightly on Wednesday by fresh economic data.
Markit’s final October Manufacturing PMI were mixed, printing below preliminary scores in Germany and Italy but overall beating expectations throughout the Eurozone bloc thanks to solid scores in France and Spain. Eurozone Manufacturing came in at 53.5 overall, its best factory score in over two years.
Germany’s October unemployment results also cheered markets. Unemployment fell by a better-than-expected -13k, and the key unemployment rate unexpectedly improved from 6.1% to 6.0%. This was Germany’s best unemployment rate since Germany’s reunification in 1990.
Pound (GBP) Attempts Recovery on Bets of BoE Rate Freeze
News that BoE Governor Mark Carney would stay as bank head until 2019 cheered markets on Monday, but this bullishness didn’t last and the Pound slipped on Tuesday.
After performing poorly throughout Tuesday trade, the Pound rebounded slightly on Wednesday as investors readjusted their positions ahead of Thursday’s key Bank of England (BoE) policy meeting.
Previously speculated to be the potential date for further monetary easing from the bank, analysts are becoming increasingly convinced that the bank will instead leave monetary policy frozen in November. Howard Archer, chief European economist from HIS Global Insight stated;
‘Until very recently it had been looking an extremely tight call as to whether or not the Bank of England would deliver another interest rate cut at the 3 November meeting of its Monetary Policy Committee (MPC)
Indeed, we had envisaged a spirited discussion within the MPC and very likely a split vote – probably in favour of no change in policy. However, resilient UK GDP growth of 0.5% quarter-on-quarter in the third quarter has highly likely ensured that the Bank of England will be sitting tight on monetary policy on Thursday and into 2017.’
Helping boost the outlook for the UK’s economy was Markit’s October Construction PMI for UK improved from 52.3 to 52.6, beating expectations of a drop to 51.8.
Euro Pound Sterling Exchange Rate Forecast to Slip Slightly if BoE Leaves Rates Frozen
Thursday will see the Bank of England’s (BoE) first policy decision meeting since September when the bank stated it would make a decision in November depending on upcoming data and Brexit developments.
November’s meeting was previously the source of much speculation, with many suggesting it would be the time for the BoE to extend the aggressive stimulus package it introduced in August.
However, as recent UK data has been strong, bets of further BoE easing have softened considerably. If the BoE does leave policy on hold as expected, the Pound could extend its recovery attempts on Thursday and even sustain some gains.
On the other hand, a surprise extension to monetary stimulus would leave the Pound plummeting across the board and giving up any of this week’s advances against the Euro.
Thursday will also see the publication of Markit’s October Services and Composite PMI for Britain.
In terms of Eurozone news, the European Central Bank (ECB) will publish its latest economic bulletin on Thursday, followed by September’s key Eurozone unemployment rate – which is expected to have improved from 10.1% to 10%.
The Euro could also continue to strengthen if the US Dollar continues to be sold off amid US Presidential election jitters. As a result, the Euro Pound Sterling exchange rate is unlikely to fall far this week.