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Pound Euro Exchange Rate Forecast: Sterling Crash Undermines GBP EUR Recovery

  • Pound Euro Exchange Rate Forecast: Sterling Hits 1.11 – Worst levels in 5-Years
  • Mixed Eurozone Data Keeps Shared Currency Afloat – Sterling weak once more on Brexit jitters
  • Britain’s August Trade Balance Disappoints – Weak Sterling fails to help ease deficit
  • Forecast: Quiet Eco-Calendar Next Week – Eurozone news or Brexit jitters likely to drive GBP EUR

Pound Euro Exchange Rate Forecast to Attempt More Solid Recovery Next Week

Next week’s Pound Euro exchange rate forecast sees the pair beginning to make a more sustained attempt at recovery, as Friday’s European session ended with Sterling doing little more than fluctuating throughout the day.

Analysts are still unclear on what caused the mysterious plunge in Sterling value on Friday morning, but it continued to light up headlines throughout Friday’s trade session.

GBP EUR’s recoveries were limited towards the end of the day, as September’s US Non-Farm Payroll report disappointed markets. While the report only weakened the US Dollar slightly, its rival the Euro was one of the biggest benefactors, and this allowed the Euro to hold firm against Sterling.

As a result, GBP EUR ended the week close to its worst levels since 2010.

(Previously updated 12:57 BST 07/10/2016)

Friday’s Pound Euro exchange rate forecast has been heavily altered by a sudden crash in Sterling value that occurred overnight. The GBP EUR exchange rate fluctuated in a wide range throughout Friday morning as investors adjusted their positions on the shocked British currency.

Sterling’s attempts to recover were weighed down by fresh UK data, which revealed that Britain’s account deficit had actually worsened in August despite hopes that it would be lightened by a weaker Pound. The total trade deficit fell to -£4.733b.

Markets turned their attention to the US as the day’s US Non-Farm Payroll report approached. Regardless, the Pound attempted to recover throughout the morning.

(Previously updated 8:57 BST 07/10/2016)

GBP EUR Exchange Rate Newsflash: Pound Crashes Dramatically

The Pound Euro (GBP EUR) exchange rate plummeted dramatically across the board as markets opened on Friday due to a flash crash.

While the currency has staged something of a recovery since markets opened it remains trending lower than yesterday’s closing levels.

The GBP EUR exchange rate is currently trending in the region of: 1:12

The GBP USD exchange rate is currently trending in the region of 1.24

(Previously updated 07:00 am)

Friday’s Pound Euro exchange rate forecast could lead to the pair finally making a stronger recovery attempt from this week’s lows, but it will depend heavily on the day’s incoming UK data. This includes August production figures and trade balance updates.

GBP EUR has ultimately failed to recover so far this week, hitting a fresh five-year-low of 1.1291 on Thursday afternoon. The pair has remained below the key level of 1.14 since Tuesday afternoon.

Pound (GBP) Recovery Hindered as Brexit Jitters Keep Hold over Traders

After falling to fresh multi-year-lows against various major rivals this week, the Pound has largely failed to sustain any recovery attempts as the currency continues to be weighed down by Brexit concerns despite a week of sturdy UK data.

Wednesday’s news of better-than-expected UK services performance in September, as well as criticism of the Bank of England’s (BoE) ultra-low interest rates from UK Prime Minister Theresa May, gave GBP investors sturdier ground to trade on, as the currency began to recover.

However, amid a lack of key data during Thursday’s session, Sterling slipped back to its worst 2016 levels as Brexit jitters once again took hold of forex market traders. Reuters reported;

‘Many economists and investors think (UK PM) May’s government is leaning toward a “Hard Brexit” option where Britain quits the single market in favour of imposing controls on immigration. Some fear that could hinder trade and constrict the foreign investment needed to fund Britain’s huge current account deficit, one of the biggest in the developed world.’

British traders resumed the GBP selloff on Thursday afternoon, causing the currency to fall to new lows across the board as investors continued to adjust to the week’s Brexit news.

Euro (EUR) Holds Ground Despite Mixed Eurozone Data

The Euro was able to capitalise on Sterling weakness during Thursday trade, despite the day’s Eurozone data coming in mixed.

After underwhelming Eurozone services performance in September was confirmed on Wednesday, Thursday’s session saw the publication of various German stats, as well as Retail PMIs for many Eurozone bloc countries.

Germany’s August factory orders scores impressed, improving from 0.3% to 1.0% month-on-month and from -0.6% to 2.1% year-on-year. Germany’s September Construction PMI also improved, increasing from 51.6 to 52.4.

However, the day’s Eurozone Retail PMI worsened in September in most Eurozone countries. While the contraction in Italian retail narrowed slightly, French retail fell into contraction and German retail fell from 54.1 to 53. The overall Eurozone Retail PMI for September ultimately fell into contraction from 51 to 49.6.

The European Central Bank (ECB) also published its latest meeting minutes on Thursday afternoon, stating that it would remain committed to its current quantitative easing program. Overall, this appeared to have little effect on Euro exchange rates.

Pound Euro Exchange Rate Forecast: Data Could Drive GBP EUR from Lows on Friday

While Sterling has been sold on Brexit jitters all week, it could see some fresh air on Friday due to a lack of new bearish factors adding to the currency’s selloff.

It’s entirely possible that Brexit panic trade could leave Sterling limp throughout Friday’s session too. However, as the currency extends is lowest 2016 value this week, investors may just need one or two better-than-expected ecostats to begin buying the currency from its cheapest levels.

Friday morning will see the publication of the day’s sole Eurozone dataset, August’s German industrial production figures. This is unlikely to cause significant GBP EUR movement however, as markets will focus more on the day’s UK stats.

In terms of British data, Friday will see the publication of August industrial and manufacturing production scores, as well as August’s update to Britain’s trade balances.

Since the Pound’s value began to drop in late-June, economists have been speculating that low value in the Pound could improve recovery in Britain’s account deficits. July’s score didn’t lighten as much as expected, meaning investors will pay close attention to August’s.

The afternoon’s US data also has a chance of influencing GBP EUR movement. September’s key US Non-Farm Payroll report will be published during Friday’s American session, and if these scores impress it could cause the Euro to lose ground against Sterling as EUR USD weakens.

Ultimately though, Sterling has lost considerable value this week and even if it begins to recover on Friday, this week’s Pound Euro exchange rate forecast sees the currency ending the week lower than opening levels.