- GBP EUR Exchange Rate Fluctuates Around 1.16 – Lacks supportive UK data for strong advances
- Deutsche Bank Crisis Speculation Ongoing – Euro fluctuates on Wednesday
- UK Mortgage Approvals Disappoint – Fall to 60,058 in August
- Update: German Data Boosts Euro on Thursday – September CPI impresses
- Forecast: Eurozone Data in Focus on Friday – Includes August unemployment, September flash CPI
GBP EUR Plunges as German Consumer Prices Beat Expectations
The GBP EUR exchange rate fell back closer to the week’s opening levels on Thursday afternoon, as Sterling failed to hold its ground amid better-than-expected Eurozone stats published throughout the day.
Thursday’s most impressive report had been the afternoon’s preliminary German Consumer Price Index (CPI) scores, which beat expectations in both monthly and yearly prints and boosted hopes of recovering Eurozone inflation.
Month-on-month inflation beat expectations of remaining at a stagnant 0.0% by coming in at 0.1%, while the yearly inflation print improved from 0.4% to an unexpectedly high 0.7%, beating projections of 0.6%.
By Thursday evening, all sights were set on Friday’s Eurozone CPI expectations. After an impressive German inflation report, disappointing preliminary Eurozone inflation figures for September would be especially disappointing and would likely lead to a plummet in Euro value.
(Previously updated 12:35 BST 29/09/2016)
GBP EUR Edges Lower on Thursday Morning
Movement in the GBP EUR exchange rate middled slightly around midday Thursday, as the Pound’s selloffs were limited by optimistic comments from UK Official Liam Fox.
The Secretary of State for International Trade spoke on Thursday morning, offering up insistence that Britain wants a free trade agreement with the European Union, despite Britain’s vote to leave the bloc earlier this year.
While EU leaders have persistently denied that such a deal is possible to those outside the EU, Fox’s comments cheered markets as he attempted to make a strong case for EU UK trade.
However, Sterling remained weak on the morning’s underwhelming mortgage approvals report, which plunged to a 21-month-low of 60,058 in August. As a result, GBP EUR trended a little more flatly ahead of Germany’s preliminary September inflation figures.
(Previously updated 10:24 29/09/2016)
The Pound Euro (GBP EUR) exchange rate fell on Thursday, reverting to trend in the region of 1.1576.
While UK net lending and mortgage approvals data was largely in line with forecasts, the Pound still softened against most of its rivals as the European session progressed.
The GBP EUR losses were recorded in spite of the fact German unemployment unexpectedly increased by 1k in September rather than falling by -5k in August as measures of confidence for the Eurozone as a whole showed improvement.
With German CPI data ahead, further Pound Euro exchange rate movement is expected.
(Previously updated 08:00 29/09/2016)
The GBP EUR exchange rate attempted to continue Tuesday’s recovery rally throughout Wednesday’s session, but lacked the supportive data needed for solid advances. The Euro recovered slightly amid speculation of a rescue plan for Germany’s Deutsche Bank crisis. As it stands, the majority of economists are confident that the institution will avoid collapse despite the lack of firm information about its next steps.
GBP EUR has strengthened this week after falling to a fresh post-Referendum low of 1.1478 on Monday morning. The pair surged by around half a cent on Tuesday alone, but even this week’s high of 1.1640 is well below last Friday’s best levels.
Does the Pound Euro exchange rate have the impetus to strengthen further? With UK data lacking further gains will be the result of economic news from the Eurozone.
Pound (GBP) Recovery Limited Amid Lack of Strong UK Data
While Sterling was bought up from its cheapest levels on Tuesday morning, the currency’s advances were limited as Britain’s economic outlook remained subdued amid bets of a ‘Hard Brexit’ and further Bank of England (BoE) monetary easing.
Wednesday’s session was generally quiet for Sterling traders, with the day lacking in British ecostats or any fresh Brexit speculation. Markets were instead focused largely elsewhere, such as the US Presidential race and the Eurozone’s Deutsche Bank crisis.
However, while the currency was able to hold its ground for most of Wednesday’s session and even make brief recovery attempts, the currency’s poor 2016 performance weighed on UK market sentiment. As reported by Bloomberg;
‘The Pound headed for its fifth quarterly decline versus the dollar, the longest run since 1984, as the currency bears the brunt of the UK’s decision to leave the European Union.
Sterling is the worst performer among its 16 major peers this year, having tumbled by the most on record against the U.S. currency on June 24, when Britain’s decision to quit the world’s largest trading bloc became clear. It touched a three-decade low in early July.’
Euro (EUR) Fluctuates on Ongoing Deutsche Bank Speculations
After plummeting on Tuesday as markets began to zoom in focus on a perceived crisis with Germany’s Deutsche Bank group, the Euro’s movement was more mixed on Wednesday. As summarised by The Guardian;
‘Deutsche Bank is facing questions about whether it can afford a penalty of $14bn (£10.5bn) from the US Department of Justice for mis-selling mortgage bonds a decade ago. Shares in Germany’s biggest bank have sunk to near-30-year lows and are trading just above €10 a share, illustrating investors’ concerns that they will be asked to bolster the institution’s coffers through a cash call.’
European markets opened to ongoing fears that the Eurozone and the Euro itself could be affected if Deutsche Bank collapses under financial strain after the bank’s shares plummeted by 3% on Tuesday.
However, speculation on what would become of the bank shifted throughout the day, particularly after a report was published by German newspaper Die Zeit claiming that Germany’s government was working on some kind of rescue plan for the bank.
It wasn’t long before the subsequent Euro recovery was interrupted however, as the German government quickly responded to the report by denying that a rescue plan was being drafted up.
Euro Forecast to Take Point in GBP EUR Exchange Rate on Thursday
The Euro is likely to take point in any major GBP EUR movement for the remainder of the week, as key datasets including September’s German unemployment and preliminary Consumer Price Index (CPI) scores will be released on Thursday. These prints could offer the Euro a solid boost if they beat expectations.
Thursday will also see the publication of Britain’s August consumer credit and mortgage approval results, which could finally give Sterling investors the support to continue its recovery rally if they impress markets.
Friday’s session will be another vital one for GBP EUR, with GfK publishing its September UK consumer confidence survey first thing, followed by Britain’s final Q2 Gross Domestic Product (GDP) figures later in the morning.
A slew of key Eurozone data is also due for Friday, including August’s German retail sales and Eurozone unemployment rate, as well as the Eurozone’s preliminary September CPI figures.
Brexit speculation and jitters over the Deutsche Bank crisis will also dictate the Pound to Euro exchange rate movement for the rest of the week. If the bank group’s situation worsens, GBP EUR could easily recover further from this week’s lows.