- GBP EUR 2017 Exchange Rate Edges towards Weekly Highs – Dovish Draghi weighs on Euro
- Pound Kept Afloat by Confident PM Tone – May advocates globalisation at World Economic Forum
- EUR Forecast: Trump Inauguration to Affect Euro – Depending on global inflation outlook
- GBP Forecast: Supreme Court Decision Next Week – Will High Court ruling be upheld?
GBP EUR 2017 Exchange Rate Adjusts Ahead of Trump Inauguration
The GBP EUR 2017 exchange rate fluctuated quite tightly on Friday afternoon as markets awaited the beginning of the US Trump Presidency. Trump is due to be sworn in at 17:00 GMT.
GBP EUR’s levels middled towards the afternoon, holding about its daily lows but below its daily best.
Trump is not expected to take any immediate action after becoming President, but any mention of economic stimulus in his inauguration speech could cause some market movement before American markets close for the week.
[Previously updated 13:41 GMT 20/01/2017]
Demand for the GBP EUR 2017 slipped on Friday morning as the UK’s December retail sales results disappointed investors.
Analysts expected another strong month of sales following an impressive November. The year-on-year result was expected to improve from 5.7% to 7.2%.
Unfortunately, retail sales saw a shocking plunge of -1.9% month-on-month and the yearly figure printed a disappointing 4.3%. As a result, the Pound’s performance faltered and GBP EUR fell from its weekly highs.
According to Reuters: ‘British retail sales suffered their biggest slump in more than four years in December, denting what had been a promising fourth quarter and rattling sterling as more signs emerged of a pick-up in inflation since June’s Brexit vote. Consumer spending has been the main driver of Britain’s economy since June’s referendum decision to leave the European Union, with other sources of growth like investment and trade lagging.’
[Previously updated 10:29 20/01/2017]
While 2017 started off fairly poorly for Pound exchange rates, the GBP EUR and GBP USD currency pairs have rallied over the last week thanks to the UK government offering up further clarity on the strategy we can expect during Brexit negotiations.
Prime Minister Theresa May has helped calm market chaos with promises of free trade for the UK and a vote in Parliament on the final deal.
The GBP EUR 2017 exchange rate advanced back towards the highs seen earlier in the week on Thursday, as markets reacted with disappointment to the day’s European Central Bank (ECB) press conference from President Mario Draghi.
GBP EUR has largely remained above the level of 1.15 since its surge on Tuesday. On Thursday afternoon the pair briefly advanced past 1.16 for the first time since the first week of the year.
Pound (GBP) Supported by UK Government Confidence
Sterling sentiment remained on the up throughout Thursday’s European session. After a selloff on Wednesday, the Pound strengthened again on Thursday and was able to capitalise on the day’s news.
Investors have largely ignored the domestic data published in recent days, such as Thursday’s house price balance results from RICS. The report’s figures slipped from 29% to 24% in December despite being expected to hold a firm 30%.
Instead, GBP traders focused on yet another speech from UK Prime Minister Theresa May. May spoke at the World Economic Forum (WEF) in Davos mere days after her influential Brexit speech in Britain.
During her WEF speech, she warned that globalisation had to be made to work for the average citizen. She stated;
‘Talk of greater globalisation can make people fearful. For many it means their jobs outsourced and their wages undercut. It means having to sit back as they watch their communities change around them.
And in their minds, it means watching as those who prosper seem to play by a different set of rules, while for many life remains a struggle as they get by, but don’t necessarily get on.’
Despite the globalisation warnings May confidently clarified to world leaders and corporations that Britain would become a world leader on trade.
This went alongside her previous speech in improving market confidence that Britain was not to become an isolationist nation. As a result, the long-term outlook for Sterling improved.
Euro (EUR) Sold as European Central Bank (ECB) Draghi Presser Disappoints
Demand for the Euro slipped on Thursday afternoon as markets reacted to the day’s European Central Bank (ECB) news. Given the recent strong performance by inflation data, traders had been hoping for a more optimistic outlook from the bank’s officials.
The ECB’s decision to leave the Eurozone’s monetary policy frozen didn’t surprise anyone. It was the following press conference from ECB President Mario Draghi that left investors disappointed.
Draghi struck a familiarly dovish tone during the press conference, weighing on hopes that the Eurozone economic outlook was improving. Among his statements were notes that underlying inflation pressure was still subdued and that economic outlook risks remained on the downside.
He then made a familiar statement about the possibility of a worsening outlook;
‘In particular, if the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation we stand ready to increase our asset-purchase programme in terms of size and/or duration.’
Following the press conference, investor confidence in the Eurozone’s short to mid-term economic recovery slipped and the Euro was sold off.
GBP EUR 2017 Exchange Rate Forecast to React to Trump’s First Weekend in Office
Following its gains earlier in the week, the GBP EUR 2017 exchange rate is likely to end the week above its opening levels and could even return above the level of 1.16 if Euro trade remains limp.
However, the strength of the Euro could be heavily influenced during Friday’s American session by the inauguration of Donald Trump as the 45th US President.
Uncertainty is high about what Trump will (or won’t) do during his first hours and days as President. Trump had previously proposed he would begin to put US economic stimulus measures into place the moment his term begins.
If this happens, GBP EUR could surge as the Euro is weakened by broad strength in the US Dollar. On the other hand, the Euro may strengthen slightly if Trump disappoints markets with a lack of action.
Friday’s session will also see the publication of Germany’s December producer prices and the European Central Bank’s (ECB) latest forecaster survey.
UK retail sales figures will also be published, which may give Sterling another boost before the weekend.
Overall, the GBP EUR 2017 exchange rate could see sharp movements during Friday’s American session or on Monday morning depending on the first days of the Trump Presidency.