- Pound Euro Exchange Rates Trend below 1.11 on Friday – Euro weak on ECB jitters
- UK Prime Minister Announces Parliament Debate on Brexit – Theresa May ‘U-turns’ on MP input
- GBP EUR Fails to Move on Data – Previous concerns take hold
- Forecast: More Influential Data Due Next Week – ‘Hard Brexit’ concerns could keep pressure on GBP
Pound Euro Exchange Rates Continue Flat Movement as Friday’s European Session Closes
Pound Euro Exchange Rates saw another day of familiar movement on Friday, as Sterling began to day trying to recover from its cheapest levels and falling flatly as the day’s European session drew to a close.
As it stands, GBP EUR is on track to end the week just below the week’s opening levels, at 1.10. The pair has ultimately trended very flatly all week.
Friday’s Eurozone data was not enough to inspire Euro movement as with the week’s other Eurozone data, despite the Eurozone’s August trade balance coming in above expectations.
Both the Pound and Euro were volatile and weak on Friday however, as markets indulged in a brief risk-rally.
Eurozone markets will be looking ahead to next week’s European Central Bank (ECB) meeting. Speculation has arisen over recent weeks that the ECB could hint at an end to its quantitative easing program. This would see the Euro soar if the bank indicates such a possibility.
(Previously updated 16:42 BST 13/10/2016)
Pound Euro Exchange Rates Trend Flatly Throughout Thursday
The Pound Euro exchange rate was left trending limply throughout Thursday’s session. Sterling saw little movement throughout the day, as UK headlines focused on news that the Pound’s drop in value had finally had a direct effect on British high street prices.
UK retail chain Tesco had stopped selling products from supply group Unilever on its website after Unilever began to increase product prices to make up for the Pound’s drop in value.
As a result, there have been concerns that many of Unilever’s household name brands, such as Pot Noodles and Marmite, will either become noticeably more expensive or even disappear from shop shelves.
This has been the first noticeable effect of the Pound’s Brexit-correlated plummet since the EU Referendum. Analysts warn this is just the beginning of something that will become all too common in the coming months.
The Euro, on the other hand, held its ground better on Thursday as the US Dollar was sold off slightly after its bullish run this week. Global growth concerns hit USD traders in reaction to poor Chinese trade data published on Thursday morning.
(Previously updated 12:58 BST 13/10/2016)
Pound Euro exchange rates were left largely unchanged by the day’s economic data, as GBP EUR continued to fluctuate along its relatively flat weekly trend.
RICS’ September house price balance report beat expectations, improving from 13% to 17%. Germany’s final September Consumer Price Index (CPI) scores met preliminary figures of 0.7% year-on-year.
Overall however, ‘hard Brexit’ concerns and European Central Bank (ECB) jitters continued to hold Pound Euro exchange rates in place and limit their movements in either direction on Thursday morning.
(Published 07:00 BST 13/10/2016)
Pound Euro exchange rates improved slightly and trended near their best levels this week for much of Wednesday’s session, as British Prime Minister Theresa May took a perceived U-turn on allowing MPs to discuss the conditions of Brexit negotiations in Parliament.
GBP EUR has trended largely flat this week since markets opened at the level of 1.11. The pair briefly plunged to a near seven-year-low of 1.09 on Tuesday night but Sterling recovered from this plummet and the pair trended at around 1.11 on Wednesday afternoon.
Pound (GBP) Buoyed as Theresa May Plans Parliamentary Debate on Brexit
After trending poorly throughout the week so far on continued concerns about Britain losing access to the European Union’s single market after a Brexit, the Pound was finally given more solid footing during Wednesday’s session.
Markets have been having a tough time coming to terms with the prospect of a ‘hard Brexit’, as UK traders and businesses rely heavily on the EU single market to thrive. This has kept Sterling down and unable to recover from October’s lows.
The Pound hit a record-low against a basket of currencies on Tuesday as the currency makes its correlation to Brexit concerns increasingly clear.
However, Wednesday’s news that UK Prime Minister Theresa May was planning a Parliamentary debate on Brexit negotiations cooled investor fears slightly, buoying Sterling from its worst levels. A spokeswoman for May stated on Wednesday morning;
‘We’ve always said that parliament has an important role to play, and the amendment reflects that,
But we also believe this should be done in a way that respects the decision of the people of the UK when they voted to leave the EU on 23 June and does not undermine the negotiating position of the government.’
Despite this, Sterling slumped once more towards the end of the day as May and other Conservative leaders repeated that there would be no vote on negotiating terms.
Euro Limp as European Central Bank Concerns Hold EUR Back
Euro sentiment and demand has worsened since markets opened this week, despite a slew of better-than-expected Eurozone ecostats and news of improving economic sentiment towards the currency bloc.
Tuesday saw the publication of multiple October economic sentiment surveys from ZEW, which scored above expectations in Germany and more than doubled from 5.4 to 12.3 in the bloc as a whole.
However, increasing demand for the Euro’s biggest trade rival, the US Dollar, as well as concerns over future policy of the European Central Bank (ECB) kept the currency weak.
ECB Executive Board member Yves Mersch stated on Tuesday that ultra-low interest rates were helping to keep the Eurozone economy resilient. In a New York speech he stated;
‘This resilience reflects to a large degree the amount of actual and decided monetary expansion that is priced into financial markets,
In fact, ECB staff analysis indicates that in the absence of our policies, the Euro area economy would be notably weaker.’
Markets had previously speculated that the ECB’s hesitance to introduce further easing measures meant that the bank would be heading for monetary tightening in the future.
However, Mersch’s comments dampened these hopes. As a result, the Euro struggled to hold its ground until Sterling weakened later on Wednesday afternoon.
Pound Euro Exchange Rates Unlikely to Recover if Brexit Concerns Keep Hold on Markets
With GBP now going for under 1 EUR in many airports, many will be wondering when, or even if Pound Euro exchange rates can make a strong and sustained recovery.
Unfortunately, many analysts believe GBP EUR has farther to fall still. Britain’s government also does not see an issue with Sterling’s value, meaning officials are unlikely to change policy or jawbone at all in an effort to improve the currency’s value.
Investors may react to Thursday’s morning’s UK house price balance from RICS or Germany’s final September inflation figures for most of Thursday, but based on October’s trends so far it seems more likely that Brexit concerns are more likely to dictate Sterling’s movement.
This means that unless Britain’s government can deliver a more solid plan on Brexit, or a stronger indication that it would fight for access to the European Union’s single market, GBP is likely to continue trending near its worst levels despite its cheapness.
The Euro, on the other hand, could recover some strength on the week’s optimistic ecostats if the US Dollar’s recent bullish run cools off slightly. As a result, Pound Euro exchange rates are forecast to trend on the downside for the remainder of this week.