- Pound Euro 2016 Exchange Rate Slips Below 1.19 – Hits last week’s worst levels
- Brexit Transition May not Satisfy Traders – UK trade minister hints transition will still lead to hard Brexit
- Public Sector Net Borrowing Disappoints – Sterling weaker on Wednesday
- EUR Forecast: Quieter Euro Trade Ahead – Wednesday’s consumer confidence boosts Euro
Pound Euro 2016 Exchange Rate Falls Again due to Wednesday Data
Not only did the morning’s UK borrowing figures disappoint GBP investors, the afternoon’s Eurozone consumer confidence results gave the Euro a little boost.
December’s Eurozone consumer confidence figures improved from -6.2 to -5.1, lighter than the expected figure of -6.
This, as well as the US Dollar selloff that lasted throughout the European session, gave the Euro significant breathing room on Wednesday.
As a result, GBP EUR ended the day in the region of 1.18 and could be on track to continue its current downward movement for the remainder of the week.
(Previously updated 12:43 GMT 21/12/2016)
The Pound Euro 2016 exchange rate continued to slip on Wednesday after a limp Tuesday, as the day;s UK public sector net borrowing results came in even worse than feared.
GBP EUR had been trending below the level of 1.19 since European markets opened but its losses grew to -0.3% once the UK’s November borrowing results were published.
Borrowing was predicted to worsen from 4.3b to 11.6b but instead printed at 12.2b. To bearish analysts this hinted that borrowing was only likely to worsen throughout the Brexit process as the UK government attempts to shield the economy from harm.
(Previously updated 16:35 GMT 20/12/2016)
Pound Euro 2016 Exchange Rate Edges Lower after Volatile Tuesday
Despite fluctuating for most of Tuesday’s European session, the Pound Euro 2016 exchange rate generally trended lower throughout the day. The level of 1.19 was the base point of trade throughout the day, with the pair regularly falling below this level and regularly edging above it.
GBP EUR generally trended a bit lower in the second half of the day due to comments made by UK Prime Minister Theresa May. May refused to confirm that she would offer MPs a vote on the final terms of a Brexit plan which left traders concerned once more about post-Brexit single-market access.
On Wednesday, the Pound Euro 2016 exchange rate could see more defined movement depending on the outcome of Britain’s November public sector net borrowing results. A steep borrowing figure of 11.6b is expected, which would disappoint GBP traders if true.
(Previously updated 20/12/2016)
Tuesday morning saw little defined movement in the Pound Euro 2016 exchange rate. The pair instead spent most of the European session thus far fluctuating as trade continued to lighten ahead of the holiday period.
The day’s German producer price results and UK CBI reported sales figures didn’t influence GBP EUR exchange rates either. Instead, most of the day’s early movement was a continuation of that seen on Monday.
The Pound Euro 2016 exchange rate fluctuated widely around the level of 1.19 but generally remained close to that level throughout the morning.
(Published 07:00 GMT 20/12/2016)
The Pound Euro 2016 exchange rate tumbled on Monday despite the bearish undertones in Euro trade, as the Pound was sold off in reaction to the latest Brexit concerns. With the holiday period approaching, GBP EUR trade is likely to become quieter.
GBP EUR had edged higher last week but by the end of Monday’s session had given up all of last week’s gains. The pair fell from 1.19 to 1.18.
Pound (GBP) Slumps on Fears of Eventual Hard-Brexit
The last few months have seen UK markets and the UK government wrapped in a proverbial cat and mouse game, as traders speculate whether or not the Brexit will end with or without access to the single market while the UK government offers hints both for and against the possibility.
As there was a lack of fresh UK ecostats in the new week, investors instead chose to sell the currency amid anxiety about ongoing Brexit discussions as 2017 drew near – bringing along with it the inevitable activation of Article 50.
Over the weekend, UK Trade minister Liam Fox suggested that Britain may need a transitional Brexit period for the sake of businesses with links to the EU, but argued that a post-Brexit Britain should not buy into too many of the EU’s benefits once the Brexit process is complete.
This added to concerns that Britain would eventually see a full divorce from the EU, which could mean a future without any real access to the EU’s single market.
On Monday, currency strategist Kit Jukes from Societe Generale stated;
‘The Pound has been dribbling lower as the EU debate trundles on
The sense you get is that the UK negotiators still want to have their cake and eat it … and we may have seen most of the optimism that this is going to go well come and go at this point.’
The lack of certainty in the UK government’s Brexit stance remains at the forefront of UK market jitters with just about three months to go until the Brexit process is planned to begin.
Euro (EUR) Sturdy on German Business Confidence Figures
While ongoing strength in the US Dollar kept the Euro’s best performance at bay during the new week’s trade, Monday’s Eurozone data was able to give the shared currency some support.
The IFO’s German business confidence results for December printed strongly. Business expectations met projections at 105.6, while the business climate and current assessment figures both beat expectations with 111.0 and 116.6 results respectively.
The Eurozone’s October construction output results also impressed investors, rising from -0.9% to 0.8% month-on-month and from 1.8% to 2.2% year-on-year.
Euro trade was also affected by other Eurozone factors, including news that Italy’s Monte dei Paschi bank had begun its attempt to raise money to avoid being bailed out by the Italian government.
In more optimistic news, Greece’s government continued to deny that there would be an early election in attempt to cool Greek market jitters over the last week.
Pound Euro 2016 Exchange Rate Forecast: Light Movement Expected Tuesday
Tuesday’s European session is likely to see relatively light GBP EUR trade as the day’s domestic dataset is unlikely to be enough to inspire movement in the Pound Euro 2016 exchange rate.
Germany’s November producer prices and the Eurozone’s October currency account results will be followed by UK CBI reported sales results from December.
While these figures could slightly influence GBP EUR levels, it’s more likely the exchange rate will be bought up from Monday’s lows, especially if Italian bank jitters continue to weigh on Euro demand.
A little more movement may be seen later in the week, particularly on Wednesday which will see the publication of Britain’s November public sector net borrowing results and the Eurozone’s December consumer confidence figures. Britain’s borrowing figures are expected to worsen significantly over October’s.
As the Christmas weekend approaches, this week’s overall trend could see GBP EUR struggle to recover from Monday’s lows while a lack of strong UK data or good Brexit news keep Sterling weak.
In addition, according to the Deutsche Bank the Pound is likely to renew its falls in the coming months as Article 50 is activated and Brexit concerns return to the forefront of GBP trade.
As a result, the Pound Euro 2016 exchange rate outlook is unlikely to become much more bearish in the coming week, but 2017 could see poor GBP movement once more.