- Pound Euro 2017 Exchange Rate Hits 1.15 – Single market concerns keep Sterling volatile
- European Central Bank (ECB) Speculation Heats Up – Euro markets more hawkish
- GBP Update: Brexit Speech Impresses – UK PM offers clarity on process
- EUR Forecast: ECB Meets on Thursday – Investors will watch for potential hawkish tone
Pound Euro 2017 Exchange Rate Recovers to 1.15 on Tuesday
Following the day’s Brexit speech from UK Prime Minister Theresa May, investors poured into the British Pound and by the end of the day’s European session the Pound Euro 2017 exchange rate had gained significantly.
Markets seemed most excited by May’s reconfirmation that UK Parliament would be given a vote on the final terms of a Brexit deal before it is passed into UK law, at the end of Brexit negotiations.
As a result, while GBP EUR soared to 1.15 on Tuesday some analysts predict the Pound will fall back from its highs when uncertainty begins to take hold of markets once more.
[Previously updated 12:26 GMT 17/01/2017]
The Pound Euro 2017 exchange rate surged back up again at around midday on Tuesday as traders reacted optimistically from a few comments from UK Prime Minister Theresa May’s Brexit speech.
The speech begun at 11:45 GMT. Despite May confirming there would be no full single market access for the UK after Brexit, investors grew optimistic due to her confirmation that there would be a Parliament vote on the final Brexit deal.
However, Sterling may slip slightly from its Tuesday gains as the UK government had already stated in the past that such a vote would happen.
It is the activation of Article 50 that the UK government still wishes to begin independently without going through an MP vote.
[Previously updated 16:18 GMT 16/01/2017]
Pound Euro 2017 Exchange Rate Begins Week Feeling Down
While demand for Sterling improved slightly towards the end of the day, the Pound Euro 2017 exchange rate failed to reach the level of 1.14 again for the remainder of the day’s European session.
Some analysts predict Sterling will continue to fall on Tuesday, as Theresa May’s highly anticipated speed clarifies the UK government’s stance on single market access.
However, with investors now widely expecting May will announce that the UK is to withdraw from the single market, Sterling’s losses may already be priced in. As a result, GBP may not lose much on Tuesday and may even advance slightly if May’s tone is notably hawkish on trade.
Tuesday will also see the publication of Britain’s December Consumer Price Index (CPI) results and the Eurozone’s economic sentiment survey results from ZEW for January. These are likely to take a back seat to Theresa May’s speech however.
[Previously updated 12:52 GMT 16/01/2017)
The Pound Euro 2017 exchange rate continued to edge away from its lowest level in over two months in Monday’s early-afternoon trade.
GBP EUR struggled to return to the level of 1.14 and analysts predict the rate may have further to drop in the coming week in reaction to Tuesday’s Brexit speech from UK Prime Minister Theresa May.
However, if the speech merely confirms what was reported over the weekend Sterling’s losses may be thin with most of the Pound’s losses already priced in.
[Previously updated 11:44 GMT 16/01/2017]
Mounting speculation that UK PM Theresa May will outline plans to leave the single market in tomorrow’s Brexit speech saw the Pound Euro exchange rate careen to new multi-month lows as markets reopened after the weekend.
The interbank GBP EUR exchange rate hit a low of 1.1291 before stabilising slightly in the region of 1.1376.
The Pound also fell dramatically against a number of its other most-traded peers, with GBP USD shedding over 1% to drop briefly to 1.1986 and GBP AUD hitting a low of 1.6022.
According to The Guardian;
‘On Tuesday at Lancaster House [May] will deliver her long-awaited statement on the government’s plans – potentially the most significant speech on the EU by a prime minister since David Cameron unveiled his referendum blueprint in January 2013. In so doing, she will relax her own rule that there shall be “no running commentary” on Britain’s negotiating strategy. But this statement was the price exacted by the Commons in December for MPs’ commitment to “respect the wishes of the people” and trigger Article 50 before the end of March – a price worth paying for such an undertaking.’
The day’s Eurozone data, the region’s trade figures for November, had little impact on the Pound Euro exchange rate.
Financial commentator Tim Clayton noted;
‘There was a sharp improvement in both exports and imports for the month with exports advancing 3.2% and imports and exports 1.8% with the highest totals of 2016 in both cases. Exports overall have strengthened to the peak level seen fleetingly in the first half of 2015 and the underlying trend for the last 3-6 months remains encouraging. The Eurozone should also be able to secure additional export growth from the competitive Euro and short-term optimism surrounding growth trends in the US and China, although there will be concerns surrounding the UK position.’
[Previously Updated 06:30 16/01/2017]
The Pound Euro 2017 exchange rate lost around two cents in value last week as Sterling traders began to lose hope that the UK would keep full single market access after the Brexit. The Euro was bolstered by the latest European Central Bank (ECB) meeting minutes.
GBP EUR began last week at the level of 1.16 and by Friday had fallen to a low of 1.14. This was the pair’s lowest level since November 2016 and some analysts see further losses ahead.
Pound (GBP) Undermined by Concerns of Single Market Loss
Last week was a surprisingly busy one for GBP trade despite the week’s economic calendar being relatively bare.
Wednesday’s UK data did little to influence Sterling demand, as the UK’s production figures for November were generally optimistic, but came in alongside news that the UK’s trade deficit had worsened further than expected in November.
The main focus for Pound traders was the week’s Brexit developments.
Investors became quickly concerned at the beginning of the week by comments from UK Prime Minister Theresa May, stating the UK would not be able to keep ‘bits’ of EU membership following the Brexit. This caused GBP to plummet in the first half of the week.
Later in the week Sterling’s losses were extended as the UK government announced that Theresa May’s highly anticipated Brexit speech would finally be held on the 17th of January.
This upcoming Brexit speech is expected to offer citizens and markets some clarification on how the UK government will handle the Brexit process. However, investors are concerned May will distance the UK government from promising single market access during the speech.
Euro (EUR) Kept Sturdy by European Central Bank (ECB) Speculation
Euro exchange rates improved slightly last week as Eurozone ecostats continued to impress investors and the bloc’s outlook was looking up following the publication of the European Central Bank’s (ECB) latest meeting minutes.
The week’s datasets included a better-than-expected German account surplus from November, as well as a boost in investor confidence in January.
Thursday saw Germany’s full 2016 Gross Domestic Product (GDP) published. The result came in at 1.9%, improving from 1.7% and beating the expected figure of 1.8%.
However, the best news of the week for Euro investors was likely the European Central Bank’s (ECB) latest meeting minutes, which were published on Thursday afternoon and revealed that not all ECB policymakers agreed with the extension of quantitative easing (QE) throughout 2017.
According to the report’s details on the disagreeing policymakers;
‘According to this view, the latter (public debt purchases) should remain a contingency instrument to be employed only as a last resort in an adverse scenario, such as a situation of imminent deflation, which was not applicable at present, as deflation risks had largely dissipated.’
This detail in particular bolstered hopes among investors that ECB policymakers were increasingly feeling like the Eurozone economy was recovering and may not need such extreme easing measures for much longer. As a result, demand for the Euro improved towards the end of the week.
Pound Euro 2017 Exchange Rate Forecast: PM Brexit Speech and ECB Meeting Ahead
The coming week may prove even more pivotal to the Pound Euro 2017 exchange rate than last week was as investors will already have their sights set on two big events in particular.
UK Prime Minister Theresa May is expected to make her Brexit speech on Tuesday the 17th. The UK government has indicated it is intended to offer some clarity and help to calm jittery citizens and markets ahead of the beginning of the Brexit process in March.
However, investors have low hopes for the speech and many predict it will see the government stance move further away from the possibility of promising to fight for EU single market access. This means Sterling could see significant drops on Tuesday.
Tuesday will also see the publication of Britain’s December Consumer Price Index (CPI) results. However, this is not expected to offer GBP much support as the Bank of England (BoE) has already stated that any inflation spikes caused by Sterling’s drop in value are unlikely to lead to interest rate hikes.
The week’s Eurozone data includes the ZEW January economic sentiment surveys and December inflation results, but the main event is likely to be Thursday’s European Central Bank (ECB) meeting.
While the bank is not expected to make any changes to monetary policy in its first meeting of 2017, any hints at a more hawkish outlook for the year ahead could improve demand for the Euro.
With Sterling weighed on by Brexit concerns and investors being a little more optimistic on the Eurozone in 2017, the Pound Euro 2017 exchange rate could continue to fall next week.