- Pound Euro Exchange Rate Nears 1.19 – But struggles to hold this 12-week-high
- Soft Brexit Hopes Light Fire under GBP Trade – Pound sees another day of gains
- GBP Update: UK Construction Figures Solid – Improve rather than slide as expected
- EUR Forecast: Euro Jitters to Worsen on Friday – Sunday’s upcoming Eurozone votes to weigh
Pound Euro Exchange Rate Continues to Edge Higher on Friday
As the week’s European session drew to an end, the Pound Euro exchange rate remained around Friday’s best levels. While the GBP EUR exchange rate failed to break past the key level of 1.19 to reach Thursday’s highs, the pair was on track to gain a solid half a cent on the week.
The morning’s UK construction data as well as lingering soft Brexit hopes from Thursday helped the Pound to advance on Friday. This was even easier thanks to weakness in the Euro.
The weekend’s Eurozone political events are likely to be key influences of Monday’s GBP EUR trade. If the results of Italy’s constitutional referendum and Austria’s presidential election re-run end in populist results, the Euro could plummet as protectionism fears rise.
(Previously updated 12:47 GMT 02/11/2016)
Sterling once again aimed higher on Friday, gaining almost half a cent in the Pound Euro exchange rate by the middle of the day and nearing the key level of 1.19 once again.
While GBP EUR may fall again towards the end of the day in another bout of profit-taking – as it did on Thursday – it’s evident that bias in GBP trade remains on the upside.
(Previously updated 11:16 GMT 02/12/2016)
After dropping to a multi-year low of 1.10 at the height of Brexit fears, the Pound Euro exchange rate has recovered to 1.18 – but are these gains destined to last or will the pairing fall back to its worst levels in the new year?
The current interbank GBP EUR exchange rate is 1.1832 down from the week’s best levels of 1.1941.
With the Supreme Court decision on the Parliament Vs Government Article 50 debate ahead, further Pound volatility is likely over the next couple of weeks.
The Pound found further modest support on Friday after the UK’s construction PMI came in more strongly than anticipated – the latest in a series of indications that that the UK economy is weathering the aftermath of the EU referendum more successfully than many industry experts forecast.
The Pound Euro exchange rate surged again before the weekend as traders became increasingly hopeful that a soft Brexit was possible due to the latest comments from influential figures in the Eurozone and the UK.
After holding above the key level of 1.18 on Wednesday evening and Thursday morning, the GBP EUR exchange rate made another impressive leap – this time reaching the key level of 1.19 for the first time since the beginning of September.
Pound (GBP) Surges on Hopes of Softer Brexit
Sterling has seen mixed demand over the last week and has been highly volatile as traders react to the latest shifts in Brexit debates and developments.
At the beginning of the week the British currency was sold from its highs amid profit-taking, but quickly recovered from these falls.
On Wednesday Sterling was even afforded a boost from the day’s OPEC news. The group of oil-producing nations agreed on a plan to cut oil output by 1.2m barrels a day, and if this has a long-term upside effect on oil prices as hoped this could increase global inflation.
Inflation was already set to skyrocket in Britain over the coming year due to Sterling’s plummet in value, but a global inflation increase as well might help pressure the Bank of England (BoE) to tighten monetary policy rather than keep it aggressively loose.
Thursday saw yet another upside factor emerge for GBP traders, thanks to comments made by Eurogroup President Jeroen Dijsselbloem and UK Brexit Secretary David Davis’ on the UK’s European Union single market membership.
Jijsselbloem hinted that the EU may find a way to give the UK internal market access, while Davis indicated that the UK government may even be willing to pay the EU a fee to retain single market access.
During a Parliamentary questioning session, Davis responded to Labour MP Wayne David’s question about the UK contributing to the EU for single market access, stating;
‘The major criterion here is that we get the best possible access for goods and services to the European market – and if that is included in what you are talking about, then of course we will consider it.’
GBP traders were optimistic due to the more clear intentions that the UK government’s position was not to aim entirely for a hard Brexit after all.
Euro (EUR) Fails to Hold Ground Despite Impressive Eurozone Stats
Ongoing political jitters and European Central Bank (ECB) easing concerns weighed heavily on the Euro throughout Thursday trade, making it easy for Sterling to advance on the day’s Brexit news.
EUR traders are becoming increasingly concerned that Sunday’s upcoming Eurozone public votes could somehow undermine the Euro project by acting as a conduit for protectionist, populist politics.
Italy will be holding a constitutional referendum on Sunday, which could lead to a snap election if citizens vote ‘No’, and Austria will be re-running its 2016 Presidential election.
Investors also expect the ECB will extend its aggressive monetary policy measures next Thursday, which could see quantitative easing continue on through 2017.
As a result of these influential concerns, the Euro was unable to benefit from Thursday’s Eurozone stats – even though they generally impressed.
The Eurozone’s overall November manufacturing PMIs met preliminary results, printing at 53.7, while the Eurozone unemployment rate surprised by improving from 10% to 9.8% – the best unemployment rate in the bloc since 2009.
Pound Euro Exchange Rate Forecast: GBP on Track to Sustain another Week of Gains?
While Friday may be light on economic data, the Pound may only need some lingering bullishness from this week’s Brexit and oil news to hold most of this week’s Pound Euro exchange rate gains.
The UK’s November construction PMI from Markit will be published in the morning and could support Sterling slightly if it doesn’t fall from 52.6 to 52.2 as expected.
However, with the day’s only Eurozone data the typically uninspiring Eurozone producer price results from October and Eurozone political events still weighing heavily on Euro trade, GBP EUR is unlikely to fall on Friday.
The most likely cause of a GBP EUR plummet before markets close for the week would be a profit-taking Pound selloff. Sterling has hit new multi-month highs across the board this week, making it ripe for investors wanting to make a profit from its gains.
Article 50 discussions are also likely to take market focus again in the next week and as 2016 draws to an end Brexit jitters may well return even if more traders now hope for a softer Brexit.
As a result, the Pound Euro exchange rate is likely to end the week above its opening levels but may not be able to continue advancing at its current trajectory for much longer.