The Pound Euro exchange rate has dropped by more than 10 cents since the date of the EU referendum was announced in January – can volatility increase further ahead of the vote?
- Uncertainty and Conflicting Polls Swing Pound Euro Exchange Rate – GBP EUR struggling on mixed forecasts.
- George Osborne’s Leaked Doom-Budget Sows Seeds of Panic – The leak indicates 2% cuts to defence, health and education spending.
- Eurostocks Bolster from Strong Eurozone Data, Euro Steady – Increases in GDP and industrial production save stocks from total plunge.
- Market Sentiment Reaches Peak Uncertainty – Pound volatility at unprecedented levels with the UK’s EU Referendum less than a week away.
Jo Cox Murder Stuns UK, EU Referendum Campaigns Suspended Today
The Pound Euro exchange rate shifted between 1.2500 and 1.2650 yesterday after a week of surreal occurrences, fear-inducing Brexit news and mostly favourable UK data.
Since the start of the week, the Pound Euro exchange rate has zig zagged wildly thanks to conflicting EU referendum opinion polls and UK market reports. Coming out of the weekend, the Pound saw a massive slide as the delayed-impact of a weekend poll showing a six-point ‘Brexit’ lead was felt. Since then GBP/EUR has failed to bounce back to pre-weekend levels.
Additionally, European stocks dropped but managed to regain some strength later in the week as ‘Brexit’ uncertainty erupted in the single market. It has truly been a temperamental week for both currencies.
Before European markets closed on Wednesday, the Pound Euro exchange rate sat at 1.2625.
The Pound remained trending higher as EU Referendum campaigning was suspended in response to the shocking and tragic murder of MP Jo Cox.
The 41 year old mother of two died after being attacked in West Yorkshire on Wednesday.
Labour leader Jeremy Corbyn said of the awful event: ‘Jo believed in a better world and she fought for it every day of her life with an energy, and a zest for life that would exhaust most people. She would have wanted two things above all else to happen now, one that our precious children are bathed in love and two, that we all unite to fight against the hatred that killed her.’
David Cameron and Jeremy Corbyn later paid a joint tribute to Ms Cox, appearing in her constituency of Batley and Spen.
Cameron was quoted as saying: ‘If we truly want to honour Jo, then what we should do is recognise that her values – service, community, tolerance – the values she lived and worked by, those are the values that we need to redouble in our national life in the months and years to come.’
With EU referendum campaigning on hold until at least tomorrow and some analysts anticipating that the murder of Ms Cox will support the ‘Remain’ camp, the GBP/EUR exchange rate pushed its way to 1.27.
However, as the European session continued the Pound reversed some of these gains to drop back to trending in the region of 1.2660.
The ongoing investigation into Thursday’s events is likely to remain under heavy focus over the weekend.
Pound Euro Exchange Rate Victim to Public Opinion & Brexit News
Looking at how the Pound has tracked against the Euro this week, graphs are plotting an undulating wave with GBP/EUR swinging by as much as a cent on a daily basis.
Perhaps the week’s most commented-on Brexit news related to an exchange between a flotilla of 30 Eurosceptic fishing boats headed up by UKIP’s Nigel Farage and a pleasure-craft chocked full of ‘In’ supporters, lead by Bob Geldof. The meeting became heated as insults, and water, were thrown back and forth between vessels.
Investors also focused on a harrowing emergency Brexit budget leaked by George Osborne. The budget eluded to a £30 Billion gap in finances that would be filled with further public sector cuts and increased taxes and duty.
The swirling vortex of Brexit concerns attempted to drag the flagging Pound beyond a two-month low, but was thwarted by surprise forecast-smashing domestic data. UK Wage growth continued to rise at a steady 2% and we saw a 55,000 person increase in employment. But the debate regarding the UK’s EU membership referendum is only continuing to heat up with the date of the vote less than a week away.
The Pound has reached unprecedented short term volatility levels which are not expected to relent until after the referendum is resolved.
GBP/EUR Update: Shaky Week for Eurostocks Ends on Positive Note
Pound Euro exchange rate shifts are likely to continue as Global markets have now started to get infected by the uncertainty and fear engulfing the Brexit debate.
The European stock market plunged at the beginning of the week, with indexes such as the Stoxx Europe 600 seeing their lowest levels since the announcement of the UK’s referendum date. However, favourably printing GDP data meant most European stocks succeeded in bouncing back.
Complimentary data prints have insured a semi-secure end to the week for the Eurozone. Industrial production, employment and GDP reports all impressed.
Pound Euro Forecast Points to Peak Volatility, Brexit Vote less Days Away
So what’s next for the Pound Euro exchange rate?
While next week plays host to a variety of economic reports from the EU and UK, all attention will be focused on the EU referendum results.
Some investors have forecast a 5% rebound in GBP/EUR if the UK votes to remain in the EU, with others anticipating a 10% drop in the pairing on a ‘Leave’ victory.
In terms of UK data, house prices and public finances are set for release at the start of the week. An increase in house prices would bode well for the property sector while a decrease in public finances (government spending) would indicate a bettering of general UK finances if the deficit lessened.
The Eurozone has sector PMIs and confidence reports due. Strong PMIs and an increase in confidence would normally lend support to the Euro. However, with the wild card that is the UK’s EU membership referendum next week, anything could happen.