- Tragic Murder of Jo Cox Sees Both Camps Suspend Campaigning – Pound Euro exchange rate achieves 1.27 on Friday
- UK Jobs Data Impresses–Pound fails to gain with volatility at record highs Eurozone Industrial Production Ramps Up – A forecast-smashing result could hint at a stronger Eurozone.
- Forecast: Thursday Sees UK EU Referendum Take Place – Focus will be trained on the impact of the days leading up to the vote as well as the aftermath of the result.
The Pound Euro exchange rate extended gains on Monday with the ‘Remain’ campaign taking the lead in the run up to the EU referendum.
GBP EUR surged to a high of 1.2928 as investors responded enthusiastically to diffusing Brexit concerns.
(Previously updated 18/06/2016)
The Pound Euro exchange rate has been trending upwards since Thursday’s harrowing murder of Labour MP Jo Cox.
The rally seems to have been due to both ‘Leave’ and ‘Remain’ campaigns being suspended in the aftermath of the attack.
A sullen end-note to a week that started as a slightly comedic and surreal tableaux when a nautical clash occurred on the Thames between UKIP’s Nigel Farage and musician/activist Bob Geldof. Farage headed up a flotilla of 30 anti-EU fishing boats while Geldof proselytised through loudspeakers from his pleasure-craft stowed with a bevy of ‘In’ supporters.
It has been a turbulent week for the pairing however, as favourable data prints for both currencies, and waxing and waning ‘Brexit’ doubts saw GBP/EUR see-saw until Thursday’s regrettable occurrences.
Before the close of Friday’s European session the, GBP/EUR exchange rate was trading at 1.2655, down 0.18% since the session opened. The pairing had previously pushed above 1.27.
Pound Euro Exchange Rate Pressured Ahead of EU Referendum
A week of fairly favourable UK data and light-hearted ‘Brexit’ clashes was tragically rounded off by the events that occurred on Thursday.
Jo Cox, Labour MP and human rights proponent was brutally murdered outside a hosted surgery in West Yorkshire. The 41 year old mother-of-two was shot and stabbed in the street at midday and died of her wounds before the sun set. Reports allege that the perpetrator shouted ‘Britain First’ as the attack occurred, pointing to a political motivation for the crime.
The late Ms Cox supported the UK remaining the in EU as well as increasing our humanitarian efforts in regards to immigrants/refugees. Campaigning was suspended following the regretful incident and that led to a small boost for the Pound Euro exchange rate as Thursday went on.
Mostly positive UK data printed throughout the week but undulating ‘Brexit’ sentiments afforded the Pound no permanent gains.
Eurozone Ecostats Do Little to Lift the Single Currency
The Euro started on shaky ground this week as ‘Brexit’ tremors were ultimately felt throughout the world with European stocks taking a dive. However, stock indexes managed to creep their way back up through the week as Eurozone data printed favourably.
Year-on-year Eurozone employment saw a 0.2% increase at the start of the week long with a 1.8% increase in industrial production in the region. The Eurozone trade balance also printed favourably.
Sentiment tempered by ‘Brexit’ murmurs continues to hold a considerable weight within the market.
GBP/EUR Forecast: Pound Euro Exchange Rate Movement to be Dictated by the EU Referendum
Looking to the future, next week plays host to a multitude of impactful Eurozone reports including the all-important sector PMIs. The hugely influential ZEW economic sentiment survey is also set to release for both Germany and the Eurozone. The last of the European data will be rounded off by German business sentiment surveys and French GDP data prints.
If PMIs smash forecasts then the Euro is expected to see a healthy boost that could be extended if accompanying data prints well.
For the UK, data is rather thin-on-the-ground but that matters little as we already know the Pound has all but uncoupled itself from domestic data prints in the face of next Thursday’s UK EU referendum.
The big news is that a second ILTR (indexed long-term repo) will be enacted by the Bank of England on Wednesday to prepare for the referendum. Basically the central bank is ensuring other banks have enough liquid assets to deal with whatever outcome come Thursday.
Eyes will be on both campaigns as they will be working tirelessly to bring the public to their side of the issue with the vote just around the corner.