- UPDATE: Euro creeps higher as German consumer confidence rises
- UPDATE: Pound extends gains despite falling mortgage approvals
- Vote Leave struggles to retaliate after positive week for pro-EU side
- New ‘Brexit’ poll shows ‘Remain’ voter turnout increasing
- Rise of far-right in Austria sparks concern for Eurozone
- Lack of domestic data could see key US data move GBP/EUR
Euro Edges Ahead on Rising German Consumer Confidence
The latest GfK German Consumer Confidence survey results have shown a surprise uptick in sentiment. Outlook was expected to hold steady at 9.4, but the instead rose to 9.7. Other positive data already released includes an acceleration in retail sales growth in March from 4.1% to 4.4% year-on-year.
More Eurozone data is out soon, followed by the preliminary UK GDP figures for 2016 Q1.
Falling Mortgage Approvals Figure Fails to Dent Pound Sterling Rally
Mortgage approvals saw an unexpected slide from 45,646 to 45,096 in March, despite forecasts of a rise to 46,500. However, this has failed to dampen appetite for the Pound, which continues to be buoyed by the growing – some are warning premature – belief that the ‘Brexit’ referendum is as-good-as-won. The drop has been linked to the new tax on buy-to-let homes announced in the Budget, which aims to curb growth in the ‘vulnerable’ sector and keep house prices under control. The Pound Sterling to Euro (GBP/EUR) exchange rate has extended gains to 0.5%.
The latest ‘Brexit’ referendum poll has boosted the Pound Sterling to Euro (GBP/EUR) exchange rate to a 6-week high. Meanwhile, the Euro (EUR) is putting on a mixed performance as Greece’s creditors draw closer to an accord, although victory for the leader of a far-right party in Austria in the first round of presidential elections has caused concerns.
Increasing Support for ‘Remain’ Referendum Campaign Strengthens Pound Sterling to Euro Exchange Rate
Trader confidence is high today after last week’s positive developments for Britain Stronger in Europe. The Treasury released a dovish forecast for the UK economy in the event of a ‘Brexit’, with many suggesting that having some tangible – if not disputed – numbers had helped voters make up their minds. Also, Barack Obama urged UK voters to support continued EU membership. In both cases, the ‘Leave’ campaign were perceived to have failed to adequately counter these developments, refusing to prepare their own forecasts to prove their claims of economic prosperity and getting tied up in racism claims after Boris Johnson referenced Obama’s ‘part-Kenyan’ ancestry as a reason for his ‘anti-British’ views.
The Leave campaign was further weakened after a disastrous appearance before the Treasury committee by Dominic Cummings, who runs the campaign. Cummings made a series of unsubstantiated claims, including accusing the Cabinet Office of threatening people into supporting the EU and the Confederation of British Industry (CBI) of lying about the fact that its members supported the EU.
Today’s latest referendum poll from ORB has built upon the idea that last week was a good one for ‘Remain’, as it shows that the number of supporters intending to vote has increased again. Previous polls suggested that, while the ‘Leave’ campaign had a small lead, the reluctance of ‘Remain’ supporters to actually go to the polls was widening the gap between the two sides even further. However, while the number of ‘Leave’ supporters who intend to actually vote has remained level at 70% since the beginning of April, turnout for the ‘Remain’ campaign has ticked up from 61% to 66% over the last four weeks.
As it stands, the ORB poll shows the ‘Remain’ camp with 51% of the votes and the ‘Leave’ camp with 46%.
However, the number of uncertain voters has increased from 19% on the 19th of April to 22% in today’s results, so many are warning not to accept the outcome of the vote as a given, considering there are still eight weeks of campaigning left.
Austrian Far-Right Party Victory Weakens EUR/GBP even as Greek Deal Looks Likely
News that a far-right party has won a landslide victory in the first stage of the Austrian presidential elections has caused consternation across the Eurozone. Norbert Hofer, member of Freedom Party (FPÖ), shocked pollsters after claiming 36% of votes. Hofer, who claimed that he carries a Glock firearm to protect himself due to the uncertainty caused by the refugee crisis, has strong anti-immigration and Eurosceptic views.
While the post of President in Austria is mostly ceremonial, Hofer would have the power to trigger snap elections by dissolving Parliament before the 2018 ballots are due. Considering the unexpected rise in popularity for the FPÖ member, this has many worried about the possibility of an anti-Euro government entering power. According to Professor of Political Science at Salzburg University, Reinhard Heinisch:
‘Especially if the FPÖ manages to frame the next round of the election around a polarising issues – for or against refugees, for example – the establishment parties face an uphill battle.’
President of the European Jewish Congress, Moshe Kantor, stated:
‘That a country at the heart of Europe can show such support to the far right barely 70 years on from the Holocaust shows that our collective memories are failing.’
Hofer has also claimed that, if elected, he will refuse to sign the Transatlantic Trade and Investment Partnership (TTIP), even if his government has agreed to it.
Meanwhile, the Euro to Pound Sterling (EUR/GBP) exchange rate has been boosted by comments from Wolfgang Schäuble, the German Finance Minister, who stated that ‘We will be successful in the troika’s [bailout] review with Greece.’
Pound Sterling to Euro Exchange Rate Forecast: Overseas Strength could Impact GBP/EUR
With no impactful domestic data due out for either the UK or the Eurozone today, market sentiment could be the main driver of GBP/EUR movement. European Central Bank (ECB) board member Vitor Constâncio is due to speak at the first annual ECB Macroprudential Policy and Research Conference in Frankfurt after the European session closes.
Until then, most Euro movement is likely to come from the high-impact US data due for release today. Thanks to the negative EUR/USD correlation, should the impending Durable Goods Orders release print favourably as predicted, the Euro could find its positioned weakened.
Current GBP, EUR Conversion Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending between 1.2844 and 1.2910, while the Euro to Pound Sterling (EUR/GBP) exchange rate is trading between 0.7744 and 0.7780.