GBP/EUR Holds Three-Month-High After ECB Minutes
- UK CPI Slows by More-than-Expected – But Pound bullish on even lower ‘Brexit’ bets
- British Employment Data Released – Mixed results but largely positive
- Euro Flat on Final April CPI – Reveals second month of deflation in 2016
- Update: ECB Minutes Today – Report urges politicians to assist economic recovery
The Pound to Euro exchange rate continued to trend high in the region of 1.3020 after the European Central Bank’s (ECB) latest minutes slightly slowed Sterling’s bullishness.
Rather than focusing on the monetary policy and the likelihood of upcoming easing measures, the surprisingly confrontational report urged European politicians to do their part in helping the Eurozone economy’s recovery.
The Telegraph reports;
‘Minutes of the central bank’s latest meeting revealed that policymakers had “strongly reiterated the need for other policy areas to contribute much more decisively” in assisting economic reform of the euro area.
Members of the ECB’s governing council declared that such efforts were required “both at the national and European levels” in order to provide support to long-run economic growth.’
Impressive UK Retail Sales Send GBP Higher
The Pound Sterling to Euro (GBP/EUR) exchange rate jumped to a high of 1.3073 following the publication of the UK’s latest retail sales results.
Consumer spending was shown to have increased by 1.5% on the month in April, up from a -0.7% decline in March and exceeding the forecast growth in consumer spending of 0.7%.
On the year retail sales printed at 4.2%, a marked improvement on the expected figure of 2.0%.
The Pound’s uptrend looks set to last for the time being at least, although today’s ECB meeting minutes could cause some GBP/EUR movement.
GBP/EUR Soars as ‘Brexit’ Polls Reveal Strong ‘Remain’ Lead
The Pound to Euro exchange rate experienced an unlikely hike during Wednesday’s session, hitting a three-month-high of 1.2964. At the time of writing, GBP/EUR trended in the region of 1.30.
The sudden bullishness of the pair is due to new poll data released by Ipsos MORI. The poll revealed that 55% of those asked would vote ‘Remain’, while 37% would vote ‘Leave’ in June’s referendum.
The strengthening lead for ‘Remain’ has been cited to be due to increased support from Conservative supporters on the back of Prime Minister David Cameron’s strong campaigning.
UK employment data was largely positive and helped the Pound to advance without difficulty. The reports included news that jobless claim figures had dropped -2.4k in April, alongside an employment change of 44k in the three months leading into March.
The Eurozone’s final April Consumer Price Index (CPI) report did little to bolster the Euro’s defences, as the monthly score came in at 0.0% and the yearly print revealed deflation of -0.2%.
UK retail sales are due for publication on Thursday and could trigger GBP/EUR volatility.
As it stands retail sales are expected to increase by 0.7% on the month and print at 2.0% on the year.
A less impressive result could weigh on the Pound, but may not drag the British currency below the 1.29 level.
The Pound Sterling to Euro (GBP/EUR) exchange rate continued its Monday rally until the release of Britain’s April CPI reports on Tuesday, which saw GBP/EUR stop in its tracks. The pair largely maintained its height however, having sustained around 85 pips since markets opened this week.
GBP/EUR’s rally was spurred on by decreased bets that the UK would ‘Brexit’ from the EU in June, and allowed by a Euro uninspired by light data. At the time of writing, GBP/EUR fluctuated slightly in the region of 1.2792.
Wednesday’s UK employment numbers will be the next cause of GBP/EUR exchange rate movement.
Mixed average earnings data could cause Pound volatility.
Pound Sterling (GBP) Consolidates Gains Despite Poor UK Inflation
Tuesday’s session was largely positive for the Pound despite fairly disappointing results in typically influential datasets, including April’s key Consumer Price Index (CPI) report.
The Office for National Statistics (ONS) report indicated that British inflation had slowed from 0.4% to a low 0.1%, letting down forecasts that it would merely slow to 0.3%. The yearly print was expected to hold steady at 0.5%, but instead slipped to 0.3%.
However, the results merely slowed the Pound’s rally rather than send it plummeting, as some economists had expected the lower result. According to the BBC;
‘By far the largest downward effect in April came from air transport, with prices falling by 14.2%, compared with a rise of 4.5% between the same two months last year.
This was influenced by the timing of the Easter holidays in March. Fare prices increased dramatically between February and March this year and then fell sharply in April.
The price of clothing and footwear also fell as retailers dropped prices to try to revive sales hit by last month’s cold weather.’
However, producer price index results released largely above expectations, and Monday’s releases of various EU referendum polls seemed to have a more considerable effect on the Pound.
An ORB poll published by the Telegraph revealed that the ‘Remain’ campaign’s numbers were up while less voters were now interested in a ‘Brexit’, leading to stronger Sterling sentiment.
Euro (EUR) Movement Relatively Light, Nudged by Optimistic Trade Balance
The Euro was left limp as the Pound took the lead in Tuesday’s movements, with Eurozone data still relatively quiet since last week’s mixed preliminary GDP releases.
Tuesday saw the release of updated Eurozone trade balance figures, which revealed that March’s surplus had improved from 19.0b to 28.6b while the s.a. score improved from 20.2b to 22.3b.
Unfortunately, the scores did little to inspire movement in the shared currency. This was potentially due to Eurozone investors (including German and French markets) who had taken a break for Whit Monday being slower to react to news.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: UK Employment Datasets Due Today
Sterling could be on track to lead the GBP/EUR pair once more during Wednesday’s session, as Britain’s economic calendar kicks off the day with key employment data, including unemployment, jobless claims and weekly earnings.
The jobless claimant count is forecast to remain at 2.1%, while the ILO unemployment rate is expected to remain held at 5.1% with a 0k employment change in the 3 months leading to March.
Average weekly earnings are unfortunately estimated to drop from 1.8% to 1.7%. However, the change in jobless claims is expected to drop from 6.7k to 4.5k.
Key Eurozone data is due to follow with April’s final Consumer Price Index (CPI) reports. Inflation is currently expected to be stagnant on March’s level of 1.2% month-on-month, with its yearly print predicted to follow the previous contraction of -0.2% with another contraction of -0.2%.
Investors are also likely anticipate Thursday’s ECB meeting minutes release, which could indicate how soon further easing measures could be introduced.