The UK’s inflation data for July lent the Pound Euro exchange rate some support on Tuesday, with the pairing moving away from its recent three year low to trend in the region of 1.1519. The pairing had previously fallen to a low of 1.1453. However, upbeat confidence data from Germany and the Eurozone as a whole ensured that the Pound’s gains against its common currency rival were limited.
- Pound Euro Exchange Rate Forecast to Near 1.15 – Pressure on Pound unlikely to let up
- Eurozone Growth As Expected in Q2 – German growth beats expectations while Italy slows
- Update: First Post-Brexit Inflation Figures for UK – Only slight affect from Brexit vote
- Forecast: Will Euro Winning Streak Continue? – ECB minutes and July CPI ahead
Pound Euro Exchange Rate Forecast to Fall if UK Retail Sales Affected by Brexit Vote
The Pound to Euro exchange rate was able to hold its ground above the key level of 1.15 throughout Wednesday’s session, assisted by the day’s slightly influential UK data.
According to July’s UK jobless claims report, the amount of new jobless claims made in July was far less than expected. Markets had projected that around 9k more claims would be made throughout the month than in June. However, 8.6k less jobless claims were made than in June, and the unexpected figure allowed Sterling to hold its levels.
While the figure may have been better-than-expected, analysts agree that employment trends affected by the Brexit vote would likely not become apparent for a few months.
As a result, Thursday’s UK retail sales report, which is much more likely to have been affected by the Brexit vote, will be the point of focus for GBP/EUR traders towards the end of the week.
(Previously updated 16:06 BST 16/08/2016)
Pound Euro Exchange Rate Forecast to Fluctuate Until Thursday
The Pound was able to recover from its worst levels against the Euro on Tuesday, as Britain’s July Consumer Price Index (CPI) figures beat expectations, rising from 0.5% to 0.6% on the year.
However, this result was mixed for investors as it indicated that UK inflation could surge higher by 2017 despite the Bank of England’s (BoE) record-low interest rates. This uncertainty towards the economy’s future left the currency weighed and prevented it from making a more solid recovery.
The Euro, on the other hand, was left sturdy thanks to a definite recovery in German and Eurozone economic sentiment from July to August. According to a survey published on Tuesday morning by ZEW, Eurozone economic sentiment improved from -14.7 to 4.6 in August’s print.
Wednesday’s UK jobless claims report is unlikely to cause much Pound movement unless the results somehow undermine expectations. Analysts generally do not expect the Brexit vote’s effects to be felt by the job market for a few months.
Thursday’s session, on the other hand, could be vitally important due to the likelihood that UK retail sales had been more directly affected by the Brexit vote in July. Thursday will also see the publication of the European Central Bank’s (ECB) July meeting minutes as well as Eurozone inflation results.
(Previously updated 11:29 BST 16/08/2016)
Consumer prices will be a deciding factor in coming week’s Pound Euro exchange rate forecast. Depending on the results of the inflation stats, GBP may be able to recover – but as it stands the currency is falling to new historic lows against peers like the Euro.
On Tuesday the Pound Euro exchange rate fell to a new low of 1.1453, dropping a further 0.4% from the day’s opening levels and trending in the region of its worst rate in three years.
Economists aren’t expecting today’s UK inflation data to lend the Pound much support and the GBP EUR pairing’s downtrend could continue if the ZEW economic sentiment surveys for Germany and the Eurozone as a whole impress.
(Previously updated 15/08/2016)
Pound Euro Exchange Rate Forecast to Sink to 1.14
The Pound to Euro exchange rate plunged to new three-year-lows on Monday afternoon, as markets collectively began to adjust ahead of this week’s key UK datasets.
Sterling’s value was undermined in a GBP selloff that left GBP/EUR losing around half a cent in value. The pair briefly dropped as low as 1.1482, a level not seen since July 2013.
While the week’s key UK ecostats left Sterling weak, the Euro was able to advance thanks to news that the European Central Bank (ECB) had decided back in July that the bloc’s economic recovery would ultimately not be affected by the Brexit.
According to a report from Germany’s Bundesbank, the ECB’s current plans would likely continue without the need for Brexit-related reactions or changes. The ECB’s minutes report will be published on Thursday and will give markets more statements to look over.
Tomorrow’s UK inflation data is likely to spark GBP EUR exchange rate volatility and may see the pairing hit fresh three-year lows.
(Previously updated 14:26 BST 15/08/2016)
Pound Euro Holding 1.15 After Housing Data
The Pound Euro exchange rate was left trending in the region of 1.1574 on Monday, little changed from the day’s opening levels following the publication of the latest UK house price data.
The Rightmove House Price report showed a monthly decline in values of -1.2% in August, and an annual reading of 4.1%.
Rightmove ‘predicted 2016 will be a ‘year of two halves’ for the housing market, after a surge in buyers in the first part of the year as buy-to-let investors rushed to beat a stamp duty hike which was imposed for this sector on April 1. Many purchases were brought forward which might otherwise have taken place later in the year.’
With news from the Eurozone thin on the ground today, the GBP EUR exchange rate may remain rangebound ahead of tomorrow’s UK inflation data.
Other data with the potential to impact GBP EUR exchange rate trading includes the ZEW economic sentiment surveys for Germany and the Eurozone.
The German Economic Sentiment Measure is forecast to have improved from -6.8 to 2 in August, with the measure of the Current Situation also expected to have risen from 49.8 to 50.2.
Because of the correlation between the Euro and US Dollar, US data is also liable to have an impact on Pound Euro trading.
If the nation’s upcoming inflation report reduces the odds of a rate hike from the Federal Reserve this year, the Euro could gain across the board, driving GBP EUR lower in the process.
(Previously updated 08:00 15/08/2016)
GBP/EUR tumbled gradually downward throughout last week from its opening levels of 1.1796. The pair lost almost two cents throughout the week, hitting three-year-lows of 1.1570. The pair trended below the key level of 1.16 on Friday afternoon.
Pound (GBP) Worst Major Currency thanks to Gloomy UK Outlook
The Pound had one of its worst weeks since the UK’s vote to leave the European Union last week, falling lower across the board against all majors and making no attempts to recover.
This was in part due to the residual impact of the Bank of England’s (BoE) aggressive stimulus package, announced in the first week of August. This, alongside the bearish stances of BoE officials, left Sterling with limited appeal.
Bets of further BoE easing being introduced in the coming months and increasingly low yields from the undervalued currency have led to a plummet in Sterling demand, with investors currently avoiding the currency due to its low-profit potential.
Last UK week’s ecostats did little to help the Pound’s appeal. June’s construction data was considered irrelevant due to the economic shift since the EU Referendum, and RICS’ July house price report indicated that house prices were worse-than-expected in July thanks in part to Brexit jitters.
According to Bloomberg, the British currency once again claimed the title of worst-performing major currency last week, overtaking the Argentine Peso (ARS).
‘Before the BoE’s revamped bond purchases started on Monday, Sterling had conceded the dubious honour of being the biggest loser among 32 major currencies to the Argentine Peso as it rallied from its post-Brexit lows. The Pound is now back below US$1.30 for the first time since July as the easy money policies designed to shield the economy from the decision to quit the European Union take effect.’
Euro (EUR) Sentiment Solid as Q2 German Growth Beats Expectations
The Euro completed a second week of solid gains last week despite a generally quiet economic calendar, as news continued indicating that the Eurozone’s economy was comparatively stable.
Eurozone sentiment has been strengthening over the last few weeks due to data indicating the bloc had weathered Brexit-related damage.
Friday’s Q2 Gross Domestic Product (GDP) dataset was mixed but was optimistic for the Eurozone’s biggest economy, Germany.
July’s final German inflation report met preliminary figures, while preliminary Q2 growth figures beat expectations. Q2 growth was expected to slow from 0.7% to 0.2%, but came in at 0.4%. This meant the yearly figure merely slowed from 1.9% to 1.8%, avoiding an expected fall to 1.4%.
However, France and Italy had less encouraging growth news, with their Q2 growth coming in stagnant and worse-than-expected.
This meant that growth for the Eurozone as a whole met expectations. The bloc grew by 0.3% in Q2, keeping the yearly score at 1.6%.
Eurozone industrial production was a little more optimistic, recovering from contraction and scoring 0.6% in June. Overall, these reports, as well as another selloff of the US Dollar (USD), were enough to make the Euro appealing and the currency advanced on Friday.
Pound Euro Exchange Rate Forecast: Final July UK and Eurozone Inflation Figures Ahead
The coming week’s economic calendar is a little more populated for both Britain and the Eurozone, and as a result Sterling will have less breathing space going forward than it did last week.
Unless investors particularly want to purchase the low-yield currency from its cheapest levels in the coming week, Sterling’s only real opportunity to recover will be on the release of Tuesday’s Consumer Price Index (CPI) report.
This will be the UK’s first post-Brexit inflation report, with consumer price data collected throughout July. Some analysts have speculated that an undervalued Pound will have led to an uptick in prices, which could cause issues for the Bank of England’s (BoE) low interest rate.
Other UK figures due for publication next week include the nation’s Q2 unemployment rate, jobless claims for July and July retail sales.
The Eurozone’s data has a little less influence than last week’s. ZEW’s economic sentiment survey results for Germany and the Eurozone could cause some movement on Tuesday, but besides that the most influential report on the calendar is the Eurozone’s final July CPI report.
As preliminary CPI figures have already been released, these final scores will not cause much Euro movement unless they miss preliminary scores. As Germany’s final July CPI met preliminary scores last Friday, the bloc’s inflation is also likely to confirm estimates.
Regardless, the Euro’s advancement potential is higher than the Pound’s, meaning a downtrend is to be expected for this week’s Pound Euro exchange rate forecast.