- Pound Euro Exchange Rate Near 1.15 – Pair advances amid Euro selloff
- Pound Edges Up Despite Tight Polls – Investors focusing on polls showing Conservative majority
- European Central Bank Cuts Inflation Forecast – Euro weakens
- GBP Forecast: Election Day – The Pound could see big moves on Thursday night and Friday morning
ECB Disappoints, Pound Euro Traders Await UK Election Result
The Pound Euro exchange rate continued to trend above the level of 1.15 as the European session drew to a close.
As was leaked to Bloomberg on Wednesday, the European Central Bank (ECB) confirmed it was cutting its inflation forecasts for the Eurozone for 2017 through 2019. This left the Euro weaker on Thursday.
The ECB also upgraded its growth forecasts however. Notably, the bank also indicated for the first time in a while that monetary policy was unlikely to be tightened further.
The results of the UK general election could cause big movements in the Pound Euro exchange rate on Thursday night and throughout Friday.
If the Conservative party wins a big majority as expected, the Pound will strengthen. However, in the event that a ‘hung parliament’ becomes reality, GBP EUR will plunge.
[Previously updated 12:46 BST 08/06/2017]
After making solid gains on Wednesday due to European Central Bank (ECB) concerns, the Pound Euro exchange rate trended flatly around the level of 1.15 for most of Thursday morning.
Despite it being UK general election day, Pound trade was relatively calm and flat.
The morning’s Q1 Eurozone Gross Domestic Product (GDP) update was highly impressive, beating expectations in major prints. Quarterly growth improved to 0.6% while yearly growth came in at 1.9%.
However, as it came soon before the day’s European Central Bank (ECB) news, the Euro’s movement wasn’t notably influenced by the news.
As expected, the European Central Bank (ECB) left Eurozone monetary policy frozen at its loosest levels. Investors are now looking ahead to the early afternoon when ECB President Mario Draghi will hold a press conference.
[Previously updated 16:59 BST 07/06/2017]
Pound Euro Rises on European Central Bank (ECB) Jitters
Market concerns about the policy outlook for the European Central Bank (ECB) worsened on Wednesday after a report emerged that the ECB was planning to cut its inflation forecasts.
This allowed the Pound Euro exchange rate to briefly hit 1.15 highs at multiple points throughout the day. This is despite ongoing uncertainty about Thursday’s UK general election.
The Pound is unlikely to see significant movement on Thursday until election results begin to come in on Thursday night and Friday morning. Volatility and market jitters are expected, especially if exit polls indicate the race was closer than previously expected.
[Previously updated 13:00 BST 07/06/2017]
While there has been little change in UK general election polls, the Pound Euro exchange rate advanced on Wednesday. Market concerns about the European Central Bank (ECB) have risen ahead of Thursday’s meeting.
According to a report from Bloomberg, the ECB is preparing to cut its Eurozone inflation forecast. This has led to market disappointment as analysts speculate it will now take even longer for the ECB to roll back its aggressive monetary stimulus policies.
The Pound remains jittery ahead of Thursday’s UK general election. GBP EUR could still fall in the possibility of a ‘hung parliament’ outcome.
[Published 06:00 BST 07/06/2017]
Investors appear to be relatively confident in a majority win for the Conservative party in this week’s UK general election. The Pound Euro exchange rate has edged higher this week despite polls suggesting a tightening election race with mere days to go.
GBP EUR began this week trading at the level of 1.1425. Since then the pair has neared the level of 1.15 at multiple points but resistance has kept it within the region of 1.14.
Pound (GBP) Defies Tight Polls on Conservative Majority Confidence
The British currency has advanced from its weekly lows on market confidence that the Conservative party will win a comfortable majority in this week’s UK general election.
Uncertainty remains however, and GBP EUR has been unable to advance much higher than near 1.15 as a result. The pair slipped from its highs on Tuesday afternoon as election jitters worsened, but still trended well above weekly lows.
A poll published by Survation on Monday night put the Conservatives on 41% and Labour on 40%, a mere one-point difference. YouGov’s latest seat projection suggests the Conservatives may only win 305 seats and come in 22 short of a majority. If the Conservatives fail to win a majority this would be seen as bad for the Pound.
However, despite the increasing number of polls indicating a tight race, GBP EUR remains above the week’s opening levels.
This was largely thanks to a Monday poll from ICM and The Guardian, showing an 11-point lead for the Conservatives. Betting markets are also bolstering investor confidence, with odds of a Conservative majority currently at 92%.
Joshua Mahoney from IG commented on the Pound’s deceptive strength;
‘UK election polls have been widely conflicting of late, reflecting the significant impact different methodology has upon results.
Previously we have seen the Pound fall with any mention of a hung parliament, yet with the Pound rising gradually over recent weeks, it is clear that the markets continue to foresee a Tory majority.’
Euro (EUR) Fails to Benefit from Retail Data
This week’s Eurozone data simply hasn’t been impressive enough to keep up the Euro’s recent bullish-streak. Monday’s services and composite PMIs were mixed, leading to flat Euro trade, while Tuesday’s retail sales data from the bloc was underwhelming.
April’s Eurozone retail sales report came in slower month-on-month than expected. Retail sales were projected to come in at 0.2%, but instead slowed to 0.1%. What’s more, March’s retail sales figure was revised lower from 0.3% to 0.2%.
The yearly retail sales result was definitely more impressive. Retail sales came in at 2.5% year-on-year, beating the projected 2.3%. The previous figure was revised higher to 2.5%.
Markit published its May retail PMI for the Eurozone bloc on Tuesday morning too, which dropped from 52.7 to 52.
Overall, these retail stats failed to really influence the Euro. After its recent multi-week highs, some investors also opted to sell the shared currency in profit-taking. This has helped GBP EUR to hold above the week’s opening levels.
Pound Euro Forecast: ‘Hung Parliament’ Speculation Can Still Weaken Pound
Wednesday’s session will be relatively quiet in terms of economic data from Britain or the Eurozone, but investors would be more likely to focus on UK general election polls and bets regardless.
With the UK public heading out to the polls throughout Thursday, investors have just one more day to look at and react to election polls before the main event.
Most polls and pollsters clearly show the Conservative party in the lead, but the size of that lead can still make a difference. If the Conservative party’s lead is too small to win a government majority, a ‘hung parliament’ could still be possible.
However, most analysts predict that a hung parliament is still unlikely. A surprise Labour party win is still seen as very much an outside chance too.
In the event of a Conservative majority, the Pound would advance on Friday amid hopes of smoother Brexit negotiations.
A possible ‘hung parliament’ scenario would leave the Pound considerably weaker. An extended period of negotiation would begin as parties attempt to negotiate the formation of a government, either a minority government or a coalition.
Both kinds would be weaker than a majority which could not only delay Brexit negotiations but have a negative impact on the negotiations themselves.
Investors will also be paying attention to the Eurozone’s latest growth data and European Central Bank (ECB) news on Thursday, but the UK election is sure to have the biggest impact on Pound Euro exchange rate movement.