- Pound Sterling (GBP) Exchange Rate Volatile – gauge of volatility at its highest since 2009
- ‘Brexit’ Uncertainty to Drive Sterling Movement – BoE interest rate decision unlikely to be hugely impactful
- Euro (EUR) Exchange Rates to Struggle? – Will ‘Brexit’ finally impact single currency?
- GBP/EUR Exchange Rate Forecast to be Volatile – ECB developments to cause changes
GBP Extends Gains Today
The Pound consolidated and extended gains against the Euro on Wednesday following the publication of better-than-anticipated employment stats.
With unemployment falling and average earnings climbing, GBP EUR rallied to a high of 1.2670 before edging back towards the day’s opening levels as trading continued.
Eurozone trade data revealed a widening surplus in April but the data had little impact on demand for the Euro.
(Previously updated 08:00 15/06/2016)
Pound/Euro Edges Away from 2-Month Low Before Jobs Data
Although the GBP/EUR exchange rate has moved away from its recent two-month low, with the UK’s latest employment report scheduled for publication this morning further volatility in the pairing can be expected.
A decline in average earnings or worse-than-forecast employment change could send Sterling lower.
As it stands, the Pound to Euro exchange rate is trading in the region of 1.2633
(Previously updated 15:35 15/06/2016)
UK Inflation Unchanged, GBP/EUR Static
The Pound was left trending in a narrow range against the Euro on Tuesday as the UK’s Consumer Price Index for May disappointed forecasts.
Rather than printing at 0.3% on the month and 0.4% on the year, annual inflation held at 0.3% after a monthly gain of 0.2%.
With the result giving Sterling little reason to climb, GBP/EUR held the 1.2580 level before gradually edging above 1.26.
The Pound’s modest gains against the Euro were unexpected given that the Eurozone’s Industrial Production report impressed and The Sun came out in support of the ‘Leave’ campaign.
The latest poll conducted by YouGov also put ‘Leave’ ahead.
However, there was some good news for the ‘Remain’ camp as the European Court of Justice (ECJ) blocked the European Commission’s attempts to counteract one of the renegotiated terms of the UK’s EU membership.
(Previously updated 08:30 14/06/2016)
Will the Pound (GBP) Gain on UK Inflation Data?
Whether or not the Pound Sterling to Euro (GBP/EUR) exchange rate is able to recover some of its recent losses today largely depends on how the UK’s latest inflation report prints.
An uptick in inflation would be Pound supportive, but positive data may not be enough to counter the impact of ongoing EU Referendum related concerns.
As it stands the GBP/EUR exchange rate is trending in the region of 1.2564 – close to a 2-month low.
(Previously updated 16:55 14/06/2016)
Over the coming week there will be several domestic data publications with potential to cause significant GBP/EUR exchange rate movement. However, with the EU referendum and European Central Bank (ECB) woes dominating trader focus, there is a high chance that ecostats will have somewhat of a muted impact.
With one of the latest polls pointing at a decided victory for the ‘Leave’ camp, the GBP/EUR exchange rate fell as low at 1.25 over the course of Monday’s European European session. With only ten days to go until the main event, further Pound volatility is highly likely.
British Pound (GBP) Exchange Rate: BoE Forecast to Hold Rates, ‘Brexit’ Jitters to Weigh on Demand
As we draw ever closer to the EU referendum, Sterling’s gauge of volatility has reached levels not seen since 2009, with expectations of greater price-swings to come.
Last week, the Pound managed to react to domestic data for the first time in some while, although this was also in response to traders fearing unwarranted volatility when responding to EU referendum opinion polls.
Most economists predict that data will again take a back seat, however, with arguments from both sides of the referendum debate heating up.
There will be a number of significant ecostats over the coming week with potential to cause volatility for Sterling exchange rates, however. Of particular significance will be the Bank of England’s Interest Rate decision.
Whilst the decision itself is thought not to be hugely impactful, given that policymakers will be highly unlikely to vote for changes ahead of the referendum result, the accompanying meeting minutes and statements from policymakers should be of interest.
Consumer prices data will also be of significance, especially if there is evidence that EU referendum uncertainty has had a detrimental impact.
Other notable British ecostats this week include; Average Weekly Earnings, Unemployment Rate, Unemployment Change and Retail Sales.
Euro (EUR) Exchange Rate: Will the EU Referendum Impact on the Euro?
Although the majority of analysts agree that a British exit from the European Union is likely to have far more of a damaging impact on the Eurozone in the longer-term, ‘Brexit’ uncertainty has not yet had a marked impact on the single currency.
However, given the comparatively quiet data docket and the narrowing timeframe, there is a good chance that traders may begin to price in concerns.
European Central Bank (ECB) issues are also likely to continue to drive Euro volatility. With the ECB undertaking a massive programme of corporate bond purchases, and with many policymakers questioning the effectiveness of sustained loose policy, any developments will likely contribute to Euro changes.
Whilst the domestic data docket is somewhat sparse compared with other major economies, the Euro may well see volatility in response to ecostats.
Notable releases include; Eurozone Industrial Production, ECB Economic Bulletin and Eurozone Consumer Prices. Speeches from ECB policymakers will also be likely to impact on the single currency.
Over the weekend Labour Leader Jeremy Corbyn continued to make his case for a Remain vote in the EU referendum. However, given the Pound’s softness it appears that investors are far from reassured that the UK plans to vote to stay part of the Union.
— Jeremy Corbyn MP (@jeremycorbyn) 12 June 2016
Hopes that the UK will vote to remain part of the EU were also called into question as the latest ORB poll put the ‘Leave’ camp ahead by a significant margin.
Up until now the outcome of the main polls has been extremely close so to see ‘Leave’ pulling away in this manner was unsettling for investors.
Last week the Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.2659 to 1.2853.