Euro (EUR) Slips Despite Optimistic Eurozone Data
The EUR/GBP exchange rate dropped around -0.3% during Tuesday’s session despite positive results from April’s ZEW survey.
The headline indication of Eurozone economic sentiment printed at 21.5, far higher than March’s 10.6. Germany’s sentiment also scored positively at 11.2 despite predictions of 8.0.
The Euro continues to be pressured by European Central Bank (ECB) concerns and the Pound enjoyed newfound strength after a poll indicated a strengthened turnout for the EU referendum’s ‘Remain’ camp.
This week the EUR/GBP exchange rate has fallen from a high of 0.7985 to a low of 0.7885.
EUR/GBP Returns to Opening Levels on Uninspired Markets
After this morning’s initial burst of investor distaste towards the Pound (GBP), the Euro to Pound Sterling exchange rate has dipped and now trades at around 0.7934 – close to Monday’s opening levels.
In what could be seen as an unlikely Sterling recovery, current uncertainty towards the Eurozone, including ongoing Greek bailout rows and IMF warnings, are likely to have weighed on the shared currency.
The upcoming ZEW economic sentiment surveys are likely to be the next cause of EUR/GBP movement. If the surveys show an improvement in confidence the Euro could climb. Conversely, any sign that sentiment is slipping could pressure the common currency lower.
- ECB President Draghi Offers Bearish Forecast – Rates won’t be raised until at least March 2017
- UK ‘Permanently Poorer’ Outside of EU – Chancellor George Osborne releases statements
- BoE Rate Hikes or Cuts? – Osborne reckons Pound weakness would lead to rate hikes
- Forecast: ZEW Survey Tomorrow – Euro (EUR) to react to Eurozone economic sentiment
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced on Monday as poor UK data and comments from Britain’s Chancellor of the Exchequer George Osborne inspired pessimism in Pound investors.
Euro (EUR) Rate Pressured by Dovish Draghi
While Sterling takes hits from continued ‘Brexit’ fears, the Euro (EUR) also hasn’t had much in the way of good news to drive it upwards.
The EUR/GBP pair was flat as Friday drew to an end and trended in the region of 0.7950, but rose as markets reopened for the week. At the time of writing, EUR/GBP is up almost 0.4% and trades around 0.7968.
European Central Bank (ECB) President Mario Draghi spoke in Washington on Friday, reasserting his bank’s position and stating that ECB rates would remain at their current lows until at least March 2017. He also suggested that some rates could even be cut further, including the already negative deposit rate.
His reasons for this included emerging market economies creating downside risks to Eurozone growth prospects, the current ongoing oil price crisis, and other geopolitical risks.
‘Brexit’ Fears Hit Sterling (GBP), Pound to Euro Exchange Rate Dips Again
Britain’s Chancellor of the Exchequer George Osborne has released statements on the potential outcomes of the June EU Referendum – the BBC reports his claims that the UK would be ‘permanently poorer’ outside of the European Union.
A Treasury analysis on the cost of an EU exit will say UK national income could be 6% smaller – the equivalent of £4,300 a year per household – by 2030.
He continued by suggesting that the poorest sectors of the working class would be the most greatly affected by a ‘Brexit’.
This follows his Friday comments from the International Monetary Fund (IMF) 2016 Spring Meetings on Friday, at which he claimed lenders would raise mortgage rates considerably if Britain left the EU and that the Bank of England (BoE) would have to raise interest rates in order to strengthen the weakening Pound.
These comments were somewhat at odds with the BoE minutes released last week, which intimated that a ‘Brexit’ would instead increase the possibility of interest rates being cut.
Sterling was further weakened by a Rightmove house price report published on Monday, which showed an annual slowing in property values of 7.6% to 7.3%.
Euro to Pound Sterling Exchange Rate Forecast: EUR/GBP to see Movement on ZEW Survey, ECB Decisions
For the Eurozone, the data week truly begins tomorrow as Tuesday’s session sees the release of April’s ZEW survey for both Germany and the general Eurozone.
The survey reflects economic sentiment, and if the Eurozone figure is considerably above March’s print of 10.6 it’s likely to send the Euro climbing.
While analysts, still reeling from March’s European Central Bank (ECB) easing policies, do not expect further extreme measures to be announced at this week’s ECB decision, the announcement (on Thursday) is still likely to be in focus.
Bloomberg reports a new analyst consensus on when it believes the next ECB’s action is most likely, and most analysts placed their bets on September’s meeting.
Some analysts predict, however, that the next ECB action could be as early as June.
British data will remain light until Wednesday, when key employment reports will be released.
At the time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7968, while the Pound Sterling to Euro (GBP/EUR) exchange rate traded at around 1.2549.