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Pound Euro 2017 Exchange Rate Struggles to Hold Highs on Friday

  • Pound Euro Exchange Rate Above 1.17 – Down slightly from 2017 best levels but remains strong
  • Wednesday Leaves GBP EUR Little Changed – Euro still weak on political concerns
  • UK Trade Report Impresses – But Pound held back by stronger Euro
  • EUR Forecast: Eurozone Growth Figures Next Week – Busier eco-calendar ahead

Pound Euro 2017 Exchange Rate Edges Up after Strong UK Data

The Pound Euro 2017 Exchange Rate tested its daily highs again towards the end of the week’s European session. GBP EUR fluctuated throughout the day as both currencies increased in demand, but the day’s strong UK data ultimately left it sturdy and it easily sustained gains throughout the week.

Friday afternoon saw the publication of NIESR’s Gross Domestic Product (GDP) estimate for the three months running into January. The result of 0.7% impressed investors, as did the revision of November’s result from 0.5% to 0.6%.

While Grexit concerns faded on Friday causing Euro demand to improve, the low likelihood that a solution would be met this week left traders jittery.

[Previously updated 12:42 GMT 10/02/2017]

While the Pound Euro 2017 exchange rate remained well above the week’s opening levels, it slipped at around midday on Friday as the Euro increased in strength.

Sterling looked to register more gains in the morning after the publication of Britain’s solid December trade results.

Britain’s trade deficit lightened further than expected, to -£3.30b. November’s figure was also revised lower, from -£4.17b to -£3.56b.

However, hopes increased in markets that Greece would see progress in debt relief talks with the EU sooner rather than later. As a result, much of the Euro’s weakness this week faded, allowing it to pull GBP EUR down from its best levels.

[Previously updated 14:45 GMT 09/02/2017]

Pound Euro 2017 Exchange Rate Trends Comfortably Above 1.17

The Pound Euro 2017 exchange rate was unable to hold its best levels on Thursday afternoon, but remained close to its best levels in two weeks regardless.

GBP EUR fell back slightly later in the day as the Bank of England (BoE) confirmed that Monetary Policy Committee (MPC) hawk Kristin Forbes would be standing down at the end of her term in June.

This news came just days after Forbes stated she would be willing to support UK monetary policy tightening if inflation continues to rise.

As investors digested the fact that one of the BoE’s more hawkish policymakers would be stepping down, Sterling slipped.

Traders will be largely focused on Britain’s December trade deficit update during Friday’s session, which could help secure a week of gains for the Pound if it beats expectations.

[Previously updated 12:51 GMT 09/02/2017]

Despite a lack of fresh new supportive factors for Sterling, the Pound Euro 2017 exchange rate continued to advance on Thursday and comfortably trended above the key level of 1.17 – a level it has struggled to hold so far this year.

Demand for the Euro faded on Thursday as Grexit concerns persisted, with some critics even calling for Greece to leave the Eurozone in order to tackle its debt issues.

The day’s German trade results also disappointed. While Germany reported a record-high surplus in 2016 overall, December’s figures failed to meet forecasts and the surplus slipped from €22.7b to €18.7b.

[Previously updated 11:48 GMT 09/02/2017]

The Pound Euro 2017 exchange rate saw modest gains on Wednesday following Tuesday’s surge, with investors favouring GBP amid a quiet day for news and data. The day’s Article 50 vote had little influence on the Pound, as expected. So far it appears that the UK is on course to activate Article 50 at the end of March, as originally planned.

So far this week the main source of Pound support has come from hints regarding possible interest rate hikes from a Bank of England (BoE) official. Grexit concerns have also reared their head once more, putting the Euro under pressure.

GBP EUR has gained over a cent and a half since opening the week at the level of 1.15, and now trends comfortably in the region of 1.17. Can this uptrend possibly last? Or is the Pound likely to fall away from some of the highest levels seen so far in 2017?

Pound (GBP) Continues to Benefit from Hawkish BoE Official Comment

A lack of news on Wednesday left the Pound largely reacting to Tuesday’s news, particularly the hawkish comments from Bank of England (BoE) policymaker Kristin Forbes that still have GBP traders very excited.

Forbes’ comments were released ahead of a speech she gave in Leeds on Wednesday. She indicated that she would be willing to support a UK interest rate hike in the foreseeable future if inflation continues to rise and the economy performs well.

An excerpt from her speech reads;

‘In my view, if the economy remains solid and the pick-up in the nominal data continues, this could soon suggest an increase in Bank Rate …

I believe that the MPC should be nimble and willing to quickly adjust the appropriate path for monetary policy in either direction as needed throughout this period – even if it means reversing recent adjustments to Bank Rate.’

However, despite market excitement over her hawkishness, some analysts have pointed out that these are unsurprising comments from the typically hawkish Forbes. Sam Hill from RBC stated;

‘I don’t think it would surprise many people to see Forbes confirming herself as one of those people with limited tolerance … I don’t think the markets should be swayed by her comments.’

This was likely why the Pound’s advances slowed on Wednesday and why GBP EUR failed to hold its best weekly levels.

Euro (EUR) Remains Weak on Eurozone Political Concerns

Demand for the Euro was poor on Wednesday, making it easier for the Pound Euro 2017 exchange rate to hold its ground at 1.17.

As with earlier in the week, the Euro has been weak due to increasing concern among traders that French far-right Presidential candidate, Marine Le Pen, will win this year’s French elections and move to take France out of the Eurozone.

Such a move is forecast by some bears as being something that could lead to not just a poorer French economy, but potentially also a collapse in the Euro itself.

This week’s concerning Eurozone economic news also includes Monday’s speech from European Central Bank (ECB) President Mario Draghi, who indicated that quantitative easing (QE) could be extended into 2018 if necessary.

Wednesday’s European session saw Greece debt concerns hitting headlines again too, as disagreements between Eurozone governments and the International Monetary Fund (IMF) on how to move forward with debt relief continued.

 2017 Pound Euro Forecast: Trade Data Could Influence GBP EUR This Week

While British and Eurozone economic calendars have been relatively quiet through the week so far, data due for publication on Thursday and Friday could influence movement in the Pound Euro 2017 exchange rate.

Thursday’s session will see the publication of Germany’s December trade report. The trade surplus is projected to have slipped from €22.6b to around €20b in December. Exports and imports are forecast to have contracted month-on-month.

A worse-than-expected German trade result could weaken the Euro further, but unless the report is significantly bad it’s unlikely to cause the Euro to plummet.

Friday’s session will follow up with Britain’s own December trade results. Forecasters predict Britain’s deficit will lighten slightly, so a worse-than-expected trade deficit could weaken the Pound and increase UK economic concerns among traders.

UK December industrial and manufacturing production results will also be published on Friday.

It’s also possible the Pound will be weakened by Brexit jitters later in the week, particularly if the optimism from Tuesday’s comments by Kristin Forbes fades due to analyst statements that her hawkishness is nothing surprising.

Wednesday evening’s Article 50 Parliamentary vote is unlikely to cause much significant movement in the Pound for the remainder of the week, but Sterling may become jittery due to the increasingly imminent beginning of the Brexit process.

As a result, the Pound Euro 2017 exchange rate is unlikely to advance much further this week but has a good chance of ending the week above its opening levels.