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GBP EUR 2016 Exchange Rate Returns to Highs after Autumn Statement

  • GBP EUR 2016 Exchange Rate Remains Above 1.17 – Euro struggles to drag Sterling lower
  • UK Prime Minister May Hints at Brexit Transition – A gradual Brexit process to protect businesses
  • GBP Update: Traders Adjust on Wednesday’s Autumn Statement – Hammond’s first budget
  • EUR Forecast: Italian Referendum Concerns Continue to Weigh – Euro gains limited

GBP EUR 2016 Exchange Rate Recovers Wednesday

After weakening on Tuesday due to concerns that Wednesday’s Autumn Statement would contain some kind of bearish surprise Brexit-related announcement that could send markets into a panic, the reality was much more subdued.

In UK Chancellor Philip Hammond’s first Autumn Statement in the job, his announcements were largely expected. Slower growth and higher government spending is expected during the Brexit process.

Due to the lack of surprises, investors indulged in a Sterling relief rally, taking the GBP EUR 2016 exchange rate closer to its Monday highs once again and nearing the key level of 1.18.

As the day’s European session drew to a close, GBP EUR easily held above the level of 1.17 due to weak Euro trade.

(Previously updated 16:48 GMT 22/11/2016)

GBP EUR 2016 Exchange Rate Slumps on Tuesday

The GBP EUR 2016 exchange rate extended its losses on Tuesday afternoon despite the Euro weakening due to a stronger US Dollar, as investors sold off the Pound ahead of Wednesday’s Autumn Statement.

UK Chancellor Hammond’s first budget statement is not expected to be a cheery one and Tuesday’s public sector net borrowing score, while better than expected, left analysts concerned about how long it may take to soften Britain’s considerable deficit.

Wednesday’s session will also see the publication of the Eurozone’s preliminary November PMIs from Markit. If these figures beat expectations and indicate that Eurozone activity had been solid in November, Euro trade is likely to improve in the coming days.

(Previously updated 12:44 GMT 22/11/2016)

After surging on Monday, the GBP EUR 2016 exchange rate gave up some of its highs on Tuesday as traders grew jittery over speculation on Wednesday’s UK Autumn budget Statement.

Markets expect UK Chancellor Philip Hammond will play down the prospects of post-Brexit economic activity slightly, but if the short to mid term outlook remains sturdy the Pound may hold its ground slightly.

Meanwhile, the Euro continued to recover from its weekend lows and made up for some of Monday’s GBP EUR losses. The shared currency lacked the momentum needed to take GBP EUR closer to the week’s opening levels, however.

(Published 07:00 GMT 22/11/2016)

The GBP EUR 2016 exchange rate saw mixed movement throughout Monday’s session but eventually surged on hopes for a ‘transition’ Brexit deal, thanks to a speech from UK Prime Minister Theresa May at a CBI conference.

After trending generally flatly last week, GBP EUR slipped to a low of 1.15 on Monday morning before surging to above 1.17 in the afternoon.

Pound (GBP) Surges on Hopes for Brexit Transition Period

The Pound initially performed poorly on Monday morning as its strength from last week continued to fade on renewed concerns that the UK would be facing a hard Brexit – a future UK economy without access to the European Union’s single market.

Optimism surrounding Britain’s impressive October retail sales figures from last week as well as hopes for better UK-US trade relations under US President-elect Donald Trump also faded on Monday, leaving Sterling initially weak as it was sold from its highs in profit-taking.

UK traders were also made anxious by comments made over the weekend by UK Chancellor Philip Hammond, who indicated that post-Brexit UK would face many economic challenges.

As a result, Sterling started off the week with a number of downside factors weighing on demand. This changed later in the day however, as UK Prime Minister Theresa May made a speech at this week’s CBI conference and hinted that the government’s Brexit plans were beginning to take shape.

After CBI President Paul Drescher stated in his own speech to the conference that the possibility of a dramatic overnight change in UK trade on the morning after the Brexit process is complete was a factor of considerable uncertainty and unease for businesses.

In her own speech which addressed these concerns, May stated;

‘I understand the point that Paul has made, others have made this point, that people don’t want a cliff edge, they want to know with some certainty how things are going to go forward. That will be part of the work that we do in terms of the negotiation that we are undertaking with the European Union.’

Markets concerns were cooled by hopes that Britain may see a transition out of the European Union rather than suddenly withdrawing in one day in 2019. As a result, Sterling rallied throughout the afternoon.

Euro (EUR) Recovers on Market Hopes for Eurozone’s 2017 Elections

The Euro was able to limit some of the Pound’s gains on Monday, as trader sentiment towards the shared currency had also improved after last week’s bearishness.

Investors had been hesitant to buy into the Euro due to concerns about the rising popularity of protectionist policies in the UK and US, with fears such politics could destabilise the Euro project if they began to rise in the Eurozone too.

However, demand for the Euro improved on Monday thanks to fresh developments in 2017’s upcoming French and German elections.

German Chancellor Angela Merkel confirmed that she would stand in Germany’s 2017 election for a potential fourth term. This, as well as news that Francois Fillon had emerged as a potential new favourite to win next year’s French election cheered Euro traders.

GBP EUR 2016 Exchange Rate Forecast: Sterling Strength Could Last until Wednesday

UK traders were initially wary of buying into the GBP EUR 2016 exchange rate ahead of Wednesday’s Autumn budget statement, the first from new UK Chancellor of the Exchequer Philip Hammond.

Hammond’s comments over the weekend that the UK economy would face challenging times after the Brexit process was complete left analysts expecting a dovish forecast on the economy during Wednesday’s statements.

This means that even if Sterling continues to trend with an upward bias throughout Tuesday, its gains could be limited on Wednesday if Hammond takes a dovish stance on the short to long-term outlook for Britain’s economy.

Until then, the Pound could continue to hold its ground on Monday’s hopes of a Brexit transition period, as well as Tuesday’s publication of October public sector net borrowing figures if they manage to impress.

Impressive PSNB results may even indicate that Wednesday’s Autumn Statement could be more hawkish than expected.

On the other hand, Euro movement is likely to be mixed. While the shared currency may continue to be bought up from its lows, the nearing Italian constitutional referendum is likely to continue weighing on Euro demand.

As it stands, the GBP EUR 2016 exchange rate could see another week of gains ahead of it – but this largely depends on if the Pound can hold its current levels as well as the tone taken in Chancellor Hammond’s budget statement on Wednesday.