- Pound Euro 2017 Exchange Rate at 1.14 – Pair drops following ECB meeting
- UK Budget Leaves Pound Little Changed – Lack of fresh Brexit news in Budget
- ECB President Press Conference Impresses – Draghi surprisingly hawkish
- Forecast: Bank of England Meets Next Week – Could the BoE shift tones too?
Pound Euro 2017 Exchange Rate Ends Week at 1.14
As the Pound Euro 2017 exchange rate continued to fall throughout Friday’s European session, GBP EUR was well on track to end the week over a cent below the week’s opening levels and in the region of 1.14.
So what potential support is in store for the Pound next week? If Brexit news over the weekend adds new hopes for a slightly softer Brexit this would support the Pound, but a lack of Brexit news may see the Pound jittery on Monday as investors expect the formal beginning of the process will continue to draw nearer.
The most important session next week will be Thursday, which will see the Bank of England (BoE) hold its March policy decision. Eurozone Consumer Price Index (CPI) figures from February will also be published.
[Previously updated 12:44 GMT 10/03/2017]
The Pound Euro 2017 exchange rate continued to fall throughout Friday morning as the day’s UK data failed to give the Pound any notable support. The Euro continued to benefit from Thursday’s ECB news.
While January’s UK trade deficit figures were impressive, the day’s other UK data was mixed so the Pound failed to find the momentum needed to make a recovery.
January’s UK trade balance lightened much further than expected, to -£1.97b, while the December figure was revised higher from -£3.3b to -£2.03b.
UK construction output also beat projections in its year-on-year January print. However, January manufacturing production and industrial production both failed to meet expectations in yearly prints, and saw contractions in monthly prints.
As a result, GBP EUR remained in the region of 1.14.
[Previously updated 17:00 GMT 09/03/2017]
Surprisingly Hawkish Draghi Knocks Pound Euro 2017 Exchange Rate Below 1.15
The Pound Euro 2017 exchange rate finally fell below the support levels at 1.15 to trend in the region of 1.14 on Thursday afternoon.
Investors bought up the Euro following the day’s press conference with European Central Bank (ECB) President Mario Draghi, as Draghi was more hawkish than most investors expected.
While Draghi warned that inflationary pressures remained subdued and that political risks in the Eurozone and US were high, he confirmed that the ECB had increased its growth and inflation forecasts for the Euro bloc.
Not only that, but Draghi surprised traders by indicating that deflationary risks had ‘largely disappeared’. He also stated that ‘Market-based inflation expectations have increased noticeably.’
This improved hopes that the ECB could begin to move away form ultra-loose monetary policy in the next year and bolstered the Euro.
[Previously updated 12:58 GMT 09/03/2017]
As was widely expected, the European Central Bank (ECB) left Eurozone monetary policy frozen during Thursday’s policy decision.
While some investors sold the Euro following the decision, the Pound Euro 2017 exchange rate remained weak due to a lack of supportive factors in Sterling trade.
GBP EUR remained near the week’s multi-week-lows and tested support levels of 1.15 multiple times throughout the day.
Investors now look ahead to the upcoming press conference from ECB President Mario Draghi. If Draghi surprises with an unexpectedly hawkish or dovish tone the Euro is likely to be influenced.
Some traders are hoping for Draghi to take up a slightly more optimistic tone. If he repeats his usual dovish tone seen in recent months, GBP EUR may advance slightly but likely not significantly.
[Published 06:00 GMT 09/03/2017]
The Pound Euro 2017 exchange rate spent most of Wednesday’s European session trending near its weekly lows and was largely not influenced by the day’s UK Spring Budget 2017. German data gave the Euro some slight support.
GBP EUR began this week trading at the level of 1.15 and remained at this level throughout the week so far. The pair is trending near lows not seen since mid-January.
Pound (GBP) Left Limp by Wednesday’s Unsurprising UK Budget
Wednesday saw UK Chancellor of the Exchequer Philip Hammond hold the UK Spring Budget 2017 – the final Spring Budget before the event proper is moved to the autumn instead.
Despite the huge amount of changes to Britain’s political landscape and economy in the past year, the Budget was quite basic and contained little in the way of revelations. Many of the points had already been covered in 2016’s Autumn Statement.
The Budget contained very little in the way of Brexit news or plans despite the imminence of the Brexit process – which the UK government still plans to begin by the end of the month.
The main takeaways were increases in national insurance tax for self-employed workers as well as increases in spending on grammar schools and technical education.
The independent Office for Budget Responsibility (OBR) also updated its 2017 UK growth outlook from 1.4% to 2.0% due to 2016 momentum.
Due to the lack of Brexit news or significant new infrastructure investment announcements, the Pound was left relatively limp and was unable to recover from its recent losses.
Sterling slumped earlier in the week due to a worse-than-expected UK retail sales report from the British Retail Consortium (BRC).
The report indicated that UK retail sales dropped by -0.4% year-on-year in the three months leading into February. This increased concerns that Britain’s retail sector would face significant difficulty throughout 2017.
Euro (EUR) Supported Slightly by German Industrial Production
The Euro’s gains against the Pound on Wednesday were modest at best. This was partially to do with general weakness in the Pound but also the day’s supportive Eurozone ecostats.
Wednesday morning saw the publication of Germany’s January industrial production results, which beat expectations in both prints.
December’s monthly result was revised higher from -3.0% to -2.4% and January’s monthly result saw a better-than-expected improvement to 2.8% – despite being predicted to only hit 2.5%.
The year-on-year figure also impressed, rising from -0.1% to 0.0% despite being projected to see a sharper contraction of -0.6%.
This slightly offset the disappointment in Tuesday’s German data – which saw German factory orders coming in with worse-than-expected contractions in both monthly and yearly prints.
Investors also spent Wednesday preparing for Thursday’s European Central Bank (ECB) meeting. This limited the Euro’s Wednesday strength as investors expect the bank to maintain its stance that policy will be kept loose for the foreseeable future.
Pound Euro 2017 Exchange Rate Forecast: European Central Bank in Focus
Thursday’s session will see the European Central Bank (ECB) hold its March policy decision. Once again, investors and analysts generally do not expect any notable change from the bank’s usual stance.
Analysts predict the bank will leave Eurozone policy frozen in its current ultra-loose state for the foreseeable future and will note that underlying Eurozone inflationary pressures remain subdued. It is also possible the bank will again warn on political and economic uncertainty in the US and Eurozone in 2017.
While most analysts don’t expect the ECB to edge away from its loose policy bias until late-2017, some analysts believe there is room for the ECB to begin doing this sooner. Currency strategist Sam Lynton-Brown from BNP Paribas stated;
‘We’re expecting them to change their assessment around the risks – at the moment they have them to the downside, but we have an out-of-consensus call that they’re likely to say either that downside risks have diminished or become more balanced.’
This would be partially due to the increased interest rate outlook in the US, which some analysts argue could pressure the ECB to act. However, if the ECB does what most traders expect and repeats its recent tone, the Euro is unlikely to see much inspired movement on Thursday.
This would leave Friday’s ecostats as the next most influential events of the week. Friday will see the publication of Britain’s January trade deficit update, as well as manufacturing and industrial production stats from January.
January’s German trade balance results will also be published on Friday, which could give the Pound Euro 2017 exchange rate some late-week influence.