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GBP/EUR Exchange Rate Suffers as US NFP Disappoints Forecasts, Euro Firms

  • Latest Poll Hints at Net Shift Towards UK ‘Brexit’ – Leave gained decisive lead in YouGov Poll
  • Pound Nosedives as Polls Continue to Cause Unrest – Not helped by subpar US Non-Farm Payroll release
  • Positive Eurozone Data Reinforces EUR – Eurozone retail PMI figures show increases across the board
  • Strong Week of Data Releases Ahead – European financial official’s speeches and UK production reports could shake market

The GBP/EUR exchange rate was hurt as the Pound slumped once more today with further polls showing an increase in ‘Brexit’ sentiment within the British populace.

This is a bit of a turnaround from the situation seen at the beginning of May, when support for the ‘Remain’ campaign pushed GBP/EUR to 1.32.

The Euro was afforded a notable increase against the Pound due to weak US Non-Farm Payrolls (NFP) data failing to reach even half of the 160,000 number forecast. With the EUR/USD currency pairing being the world’s most-traded, the Euro’s gains against a floundering US Dollar sent the Euro higher across the board.

The latest EU referendum polls show the ‘Brexit’ camp taking the lead, causing the highest level of Sterling volatility since the 2008 world banking crisis. Bloomberg’s Garfield Clinton Reynolds wrote today:

‘With less than three weeks to the June 23 referendum, investors have been disconcerted as the ‘Leave’ campaign gains traction. The currency dropped as much as 1.1 percent to $1.4353 on Monday and was down against all 16 major peers, while one-month volatility surged to 21.34 percent, a level last seen in February 2009.’

All this unease has led the GBP/EUR exchange rate to sit at €1.2713 with mounting uncertainty only supporting further depreciation.

As European trading continued the Pound extended losses and slumped as low as 1.2647. With influential UK data lacking until Wednesday, EU referendum news is likely to remain the driving force behind Sterling movement.

GBP Exchange Rates Buckles under Increased Scrutiny, is a ‘Brexit’ on the Horizon?

Increasing fears for a ‘Brexit’ have placed market players on a dovish footing even with global risk sentiment rising due to a weakening US Dollar. Last week’s UK services report showed a promising increase from 52.3 to 53.5 but failed to be enough to strengthen the shaken Sterling.

The latest polls seem to indicate a continuation of the recent trend towards ‘pro-Brexit’, even as far as to prompt UK commercial investors to add a ‘Brexit clause’ to help stimulate a flagging property sector.

Commercial property transactions fell by nearly 40% in the first quarter and investors hope to bring back some much welcomed business by mitigating risk with such a clause, allowing investors the chance to walk away given a UK exit from the EU.

The Pound remains on shaky ground however in the lead up to the EU referendum. Approximately one third of British firms claimed the prospect of a ‘Brexit’ is having a tangible impact on business. This could hint at a potential acceleration of economic growth occurring should we vote to remain and investor uncertainty is quashed.

Shock US NFP Data Triggers EUR/GBP Exchange Rate Rally

The Euro (EUR) advanced on some of the majors today as cross-border flows bolstered the single currency after the disappointing release of US NFP figures shocked the market.

An increase in retail sales for Germany, France and Italy helped invigorate the common currency, with French and general Eurozone retail PMI coming out of contraction. An investor confidence survey showed a heartening 3.7 point increase bolstered the Euro further.

Due to these various factors the Euro has been trending optimistically, sitting at a 0.4% increase against the Pound, 0.5% against the Japanese Yen and 0.3% against the New Zealand Dollar.

Ahead of ‘Brexit’ and Financial Officials’ Speeches, GBP/EUR Likely to be Swayed by Upcoming Market Reports

A host of various European finance ministers will be giving speeches throughout the day, leading to possible changes within the market depending on the content of said speeches. Hearing from the likes of Spanish Finance Minister Luis de Guindos and the European Central Bank’s Benoit Coeure, a positive outlook could be poised to give the Euro further gains.

The UK’s May like-for-like sales report comes out tomorrow morning and is forecast to increase from -0.9% to 0.3%. Unlikely to afford much of an increase to the Pound on its own, Wednesday’s industrial and manufacturing production reports should hold some sway of the value of Sterling, with positive figures potentially increasing Sterling’s value.