- Pound Euro Exchange Rate Forecast to Slip – Could GBP/EUR fall below 1.18?
- UK Growth Figures Beat Forecasts – But investors bearish as growth interrupted by Brexit
- Update: July’s German Labour Figures Solid – As well as preliminary German CPI
- Update: Eurozone June Labour Meets Expectations – UK consumer confidence plummets
- Forecast: BoE Meeting Next Week – Will Bank of England cut rates as expected?
Pound Euro Exchange Rate Fluctuates on Friday
The Pound to Euro exchange rate fluctuated in a wide range on Friday, briefly hitting a two week low of 1.1797 as Eurozone data continued to indicate that the bloc’s economy had remained resilient despite the UK’s vote to ‘Leave’ the EU.
UK consumer confidence hit a low of -12, falling at its fastest pace since 1990 according to a July survey released by GfK.
Investors rapidly adjusted their positions on Sterling throughout the day, as Friday’s Eurozone data left Euro movement mixed. While inflation is on track to beat expectations in July, Q2 growth met bearish projections due to stagnation in the French economy.
As the week’s European session drew to an end, GBP/EUR trended widely in the region of 1.1850 on Friday afternoon.
(Previously updated 16:57 BST 28/07/2016)
Pound Euro Exchange Rate Plunges to 1.1850
The Pound to Euro exchange rate plummeted on Thursday as investors looked bearishly towards the UK currency amid news that multiple other major nations’ economies were strengthening while Britain’s appeared to weaken.
GBP/EUR fell to a two-week-low of 1.1825 on Thursday afternoon as Eurozone data continued to beat expectations, and could be on track to shed further levels if Friday’s ecostats continue the trend.
Friday’s session includes Eurozone unemployment figures for June, as well as preliminary Q2 Eurozone growth scores. The report most likely to influence GBP/EUR tomorrow however, is likely to be the estimate of the Eurozone’s July inflation.
If it scores above expectations, the Euro could extend its current uptrend. Sterling is also unlikely to recover far, as the Bank of England’s (BoE) August policy decision meeting is already under a week away. The BoE is widely expected to cut the key UK interest rate following reports of the Brexit’s damage to the UK exonomy.
(Previously updated 14:05 BST 28/07/2016)
Pound Euro Exchange Rate Declines Consolidated Following Better-than-Forecast German CPI
After starting the week on the back foot the Pound Euro exchange rate extended declines as the European session continued and Germany published better-than-anticipated inflation data.
The nation’s Consumer Price Index printed more strongly than forecast on both the month and year, indicating that the overall Eurozone figure may exceed expectations.
The prospect of sturdier inflation eased European Central Bank (ECB) easing fears to a certain extent and helped push GBP EUR to a low of 1.1839 – down over 0.8% on the day’s opening levels.
(Previously updated 08:00 28/07/2016)
Britain’s latest growth figures have done little to change the Pound Euro exchange rate forecast, as investors rearrange their positions bearishly amid expectations that solid Q2 growth was interrupted abruptly following the UK’s vote to leave the EU in June. The Euro was sturdy in comparison, with Eurozone sentiment seemingly on the up this week.
GBP/EUR continued its downward bias on Wednesday’s session, briefly falling below the key level of 1.19 multiple times as Sterling sentiment remained weak. After hitting a low of 1.1891 in the morning, the pair trended in the region of 1.1930 in the afternoon.
The looming Bank of England (BoE) interest rate decision is keeping pressure on the Pound and preventing the currency from rallying against peers like the Euro and US Dollar. As the BoE held interest rates in July, a rate cut in August’s gathering is widely expected.
Pound (GBP) Sentiment Remains Weak Despite Solid Q2 UK Growth
Pound movement has remained on the downside throughout the week so far, as last week’s disappointing UK flash PMIs begun a trend of bearishness surrounding post-Referendum UK data.
With the next Bank of England (BoE) policy decision meeting only a week away, investors have seen little reason to purchase the Pound as data continues to point to the high likelihood of an extensive stimulus package.
Following comments on Tuesday from BoE policymaker Martin Weale that Friday’s PMI figures had been far worse than he expected, BoE rate cut bets soared and Wednesday’s solid UK growth figures did little to change this.
The preliminary scores for Britain’s growth from April to June 2016 came in above forecasts of 0.5%, improving from 0.4% to 0.6%. This, alongside recently positive labour figures, had indicated that the UK economy was becoming increasingly healthy in the run up to June’s EU Referendum vote.
However, according to The Guardian, multiple economists are warning that these figures will mean little going forward.
‘Martin Beck, senior economic advisor to the EY Item Club, said the numbers represented “one last hurrah” for the economy before it entered a weaker and more turbulent period.
The data showed the economy was performing better in the earlier part of the second quarter than the latter part. At the time of the first estimate of gross domestic product, the ONS has less than half the data content that it will ultimately rely on for the final estimate. As a result, the numbers it gives for June are a forecast and subject to revision.’
Other analysts have also reminded markets that these figures will do nothing to dissuade the BoE from introducing new stimulus measures next week. Instead, the figures likely left some investors longing for what could have been.
Euro (EUR) Boosted by Sturdy Consumer Confidence
The Euro continued its sturdy streak on Wednesday, following recent data suggesting that the Eurozone’s economy had remained resilient to panic shockwaves from the UK’s decision to leave the European Union.
Bets that the Eurozone would be affected worse than the UK’s economy have plummeted, leaving the Euro in better health this week than it has been since late-June.
This was boosted slightly on Wednesday, as consumer confidence surveys for multiple key Eurozone nations were released. GfK released its August German consumer confidence survey report, with confidence merely dipping to 10 despite a predicted slide to 9.9.
French consumer confidence was slightly disappointing, falling from 97 to 96 in July. This was likely due to recent terror-associated attacks in the nation, rather than Britain’s Brexit vote.
Italian confidence, on the other hand, was well up from 110.2 to 111.3, indicating that Italian citizens weren’t half as worried about the perceived Italian banking crisis as other economists have been in recent weeks.
Pound Euro Exchange Rate Forecast: Key Eurozone Data Decorates Days Ahead
The Pound to Euro exchange rate is likely to move with the Euro as the focal point of trade towards the end of the week, making a change for the recently Sterling-dominated pair.
Upcoming Eurozone data – especially July’s preliminary Consumer Price Index (CPI) figures – are likely to continue to indicate how much the Eurozone’s economy has weathered the market panic in the month since Britain voted to Brexit in late-June.
Thursday’s session includes multiple key German publications, including July labour figures and flash July inflation scores. Currently, inflation is forecast to be on track to improve from 0.1% to 0.2% in July.
Friday’s session follows with Eurozone unemployment for June, preliminary Q2 Eurozone growth, and year-on-year Eurozone CPI estimates. As mentioned, July figures in particular will be the ones to watch as markets judge how the Eurozone has fared since the UK voted Brexit.
Britain’s economic calendar is set to be relatively quiet for the remainder of the week, but GfK’s July consumer confidence survey could be influential when it is released on Friday. Confidence is currently projected to plummet from -1 to -8.
Besides economic data, an increase in bets that the Bank of England (BoE) will introduce a stimulus package next week, as well as speculation that Britain could be delving into negative interest rates soon, is likely to leave the Pound Euro exchange rate forecast heavily pressured.