The Pound Euro exchange rate recovered from its daily low of 1.1453 to trend above 1.15 as the European session continued and investors digested the results of the latest UK inflation data.
- Pound Euro Exchange Rate Slips to 1.14 – Fluctuates around 1.15 key level
- Economic Anxiety Drives Sterling Lower – GBP/EUR hits worst levels in three years
- Update: Can UK CPI Help GBP Recover? – Or will Thursday data undermine Pound further?
- Update: ZEW Economic Surveys Solid – Eurozone economic sentiment positive in August
- Update: UK Jobless Claims Decent – Retail sales on Thursday
Pound Euro Exchange Rate Largely Flat on Wednesday
The Pound was able to hold the Euro’s advancement attempts at bay for most of Wednesday’s trade session, with GBP/EUR largely trending between 1.1530 and 1.1550 throughout the day.
While the pair did dip closer towards the key level of 1.1500 on occasion, Sterling was largely able to hold its ground as investors continued to buy it from its cheapest levels.
This was in part thanks to the day’s UK jobless claims report, which revealed that 8.6k less jobless claims had been made than in July. However, Sterling’s advance was limited as this report had not yet seen any notable effects from the Brexit vote.
The potential for Thursday’s July retail sales report to have been heavily affected by the Referendum result also weighed GBP down, with investors spending the latter half of the day readjusting their positions.
The Euro remained sturdy across the board despite the Pound’s fluctuations and the US Dollar’s recovery attempts. However, it could see a much clearer movement on Thursday depending on the results of the Eurozone’s July inflation as well as the latest European Central Bank (ECB) meeting minutes.
(Previously updated 16:26 BST 16/08/2016)
Pound Euro Exchange Rate Fluctuates Above Worst Levels on Tuesday
The Pound to Euro exchange rate fluctuated widely on Tuesday afternoon in response to that morning’s UK inflation results. GBP/EUR regularly fell as low as 1.1490 and hopped as high as 1.1525 throughout the day.
Sterling was the cause of volatility as the Euro was able to hold its ground throughout the day, thanks in part to the day’s optimistic economic sentiment report from ZEW. A weak US Dollar also boosted the Euro’s appeal, helping it to avoid losses against Sterling.
Wednesday may not see a considerable amount of GBP/EUR movement unless July’s jobless claims report defies expectations in some considerable way. The claimant count rate is expected to hold at 2.2%, and 9.0k new claims are projected to have been made.
Thursday’s session will be far more vital to the Pound Euro exchange rate’s tone going forward, as analysts have predicted that UK’s July retail sales have likely felt a more direct impact from the Brexit vote in late-June.
Thursday will also see the publication of the Eurozone’s final July Consumer Price Index (CPI) scores, as well as the European Central Bank’s (ECB) July meeting minutes.
The combination of these reports could give investors an indication of the future of Eurozone monetary policy, which could drive Euro movement towards the end of the week.
(Previously updated 11:25 BST 16/08/2016)
The Pound Euro exchange rate pared this morning’s losses and climbed back above 1.15 following the release of the UK’s latest inflation data.
The report showed that CPI dipped -0.1% on the month in July, as expected, but came in at 0.6% on the year. Economists had anticipated a non-core reading of 0.5%.
GBP/EUR is currently trending in the region of 1.1519
Meanwhile, the ZEW economic sentiment surveys for Germany and the Eurozone both impressed, with the latter improving from -6.8 to 0.5 (below the 2.0 reading forecast) and the measure for the currency bloc as a whole climbing from -14.7 to 4.6.
(Previously updated 08:00 16/08/2016)
The Pound Euro exchange rate plummeted once more on Monday after last week’s solid session of losses. The Bank of England’s (BoE) economic stimulus made Sterling unappealing last week, and this week the weight on the British currency is the imminent release of economic data collected since the Brexit vote.
GBP/EUR briefly attempted to recover soon after markets opened, but was only able to make it as high as 1.1599 before losing over half a cent in value. By Monday afternoon, the pair had sunk to 1.1500, briefly falling as low as 1.1488. As Tuesday dawned, the Pound fell further still, holding below the 1.50 level and slumping all the way to 1.1453. Even if the UK’s inflation data exceeds forecasts, economists are unconvinced the Pound will derive much benefit in light of the fact that the Bank of England (BoE) has intimated that it’s willing to overlook rising consumer price pressures and keep borrowing costs at record lows.
Pound (GBP) Plunges Ahead of Key UK Inflation, Jobs Data
Sterling attempted to hold its ground on Monday morning, before plunging in the afternoon as investors adjusted in anticipation of what many expect to be a testing week for the UK economy.
While Monday morning’s house price report from Rightmove wasn’t enough to cause Sterling to plummet, it didn’t help mute the downtrend either as house prices contracted by -1.2% in August.
Sterling had already slipped throughout most of last week’s trade sessions, in one of the worst weeks for the currency since the Brexit vote.
Bets that Bank of England (BoE) stimuli will worsen in coming months as well as the ever-low value of the Pound exchange rates meant that the currency was becoming too low-yield. There is currently very little reason for investors to buy the currency amid low profit prospects.
Friday’s session put a crown on Sterling’s notably low value, as GBP was named the worst performing major currency in the world for 2016.
With three vital July datasets due for publication throughout the week (inflation, employment and retail sales), this uneasy stance on the Pound dominated the market on Monday.
Euro (EUR) Boosted by Weak Rivals
A weak Pound was just one of the currencies giving the Euro a leg up on Monday. Despite there being a lack of key datasets for the Eurozone until Tuesday and Thursday, the shared currency was able to easily capitalise on its weak rivals.
The US Dollar also trended lower on Monday, following last week’s disappointing US stats. US retail sales had stagnated in July, and Monday’s manufacturing print from Empire had contracted by -4.21. Another ‘Greenback’ selloff left the Euro stronger.
However, perhaps the biggest boon for the Euro on Monday was the news that the European Central Bank (ECB) had concluded in July that the Brexit vote would likely not derail the Eurozone’s economic recovery. The Wall Street Journal reported;
‘The ECB’s 25-member governing council “came to the conclusion that the base scenario of a continuing economic recovery and gradually rising inflation rates in the Eurozone is still intact,” the Bundesbank wrote in its monthly report.
German economic growth should continue over the summer, the Bundesbank said, as the positive expectations of German firms have only dimmed slightly in the wake of the referendum despite intensive public debate about its economic impact.’
This left the Euro in a strong position for the week ahead, which is likely to be a big one for GBP/EUR, particularly from Sterling’s perspective.
Pound Euro Exchange Rate Forecast: UK Inflation Figures Ahead
Tuesday’s session will finally see the release of the UK’s key July Consumer Price Index (CPI) figures, kick-starting off the UK economy’s testing week.
While many UK PMIs have been released for the most of July, analysts are calling the coming week the first decisive set of post-Brexit data.
These reports will show what direction the UK’s economy has been since the UK Referendum vote in June, and potentially what direction the economy could head next. According to the Financial Times;
‘This week’s most telling data are likely to come from retail sales on Thursday, said Rabobank’s foreign exchange G10 strategist Jane Foley. Sterling’s post-Brexit fall is likely to take time to be felt in inflation, while the labour market is another lagging indicator, she said.
The wide range of economists’ forecasts about retail sales illustrated the post-Brexit uncertainty. The next three to four months will demonstrate how data expose “the vulnerability of the UK economy”, Ms Foley said.’
While the Pound will evidently be this week’s big-mover, the Eurozone’s upcoming data does have the potential to drive Euro movement here and there, starting with August’s economic sentiment surveys for the bloc from ZEW.
Thursday’s session could be the most influential of any day this week for the Pound Euro exchange rate, with UK retail sales set for release as well as Eurozone inflation results for July, and the European Central Bank’s (ECB) latest meeting minutes.