Pound to Euro Exchange Rate Still Stronger amid Brexit Hopes and UK Data
Investors saw little reason to move much on the Pound to Euro (GBP/EUR) exchange rate this morning, as markets awaited the European Central Bank’s (ECB) September policy decision due this afternoon.
Since opening this week at mixed levels, GBP/EUR has sustained solid gains of over a cent thanks to UK growth data and Brexit hopes.
Overnight, GBP/EUR touched on a two month high of 1.1223 before slipping and trending closer to the key level of 1.1200 at the time of writing on Thursday.
The ECB is expected to cut Eurozone rates during today’s decision, but market focus is on the tone the bank will take in regards to quantitative easing (QE) and the Eurozone’s economic outlook.
Pound (GBP) Exchange Rates Slip Back after Latest Gains on Brexit Hopes
Most of this week’s Pound (GBP) gains have been due to hopes that Britain’s economy will avoid a recession, thanks to Monday’s stronger than expected growth report.
However, Sterling support has since been bolstered by continued speculation that a no-deal Brexit could be avoided.
Yesterday, speculation rose that the UK government could be pressured to reopen Parliament after the highest court in Scotland ruled that the long prorogation was unlawful.
On top of this, many MPs have indicated that could form a cross-party consensus to pass a softer Brexit deal, as well as a parliamentary vote on a possible second referendum.
Euro (EUR) Exchange Rates Steady as Investors Await European Central Bank (ECB)
The Euro’s (EUR) movement has been fairly limited this week, as markets are highly anticipating what could potentially be a majorly influential policy decision from the European Central Bank (ECB) today.
Investors have had little reason buy the Euro aside from weakness in its rival the US Dollar (USD), as the latest Eurozone data has only deepened concerns that the economy is struggling to recover from a slowdown, or that Germany could be headed into recession.
With the Eurozone’s economic outlook weighing, the Euro has only avoided further losses amid speculation that the European Central Bank (ECB) may not be as dovish as speculated during today’s decision.
This morning’s German and French inflation data had no notable impact on the Euro’s movement. German inflation bet projections and French inflation came in mixed.
Pound to Euro (GBP/EUR) Exchange Rate Outlook to be driven by ECB Decision
The European Central Bank’s (ECB) September policy decision will be held today, and is likely to be the most eventful news of the week for Euro investors.
Markets generally expect the ECB will cut Eurozone rates at the decision, but the focus will be on the tone the bank takes regarding quantitative easing (QE).
Some investors expect the bank to introduce a hefty QE package today, but others speculate the bank will avoid introducing significant amounts of easing.
If the bank is dovish on the Eurozone economy, GBP/EUR will surge as the Euro weakens. Less QE than expected would be Euro positive though.
Markets will remain focused on Eurozone data looking ahead. Tomorrow’s German wholesale prices and Eurozone trade balance stats, as well as any surprising developments in UK politics, will drive the Pound to Euro (GBP/EUR) exchange rate.