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Pound Sterling Euro 2016 Exchange Rate Edges Higher Despite Looming Brexit Uncertainty

  • Pound Sterling Euro 2016 Exchange Rate Above 1.16 – Weak Euro allows GBP to hold ground
  • No Single Brexit Plan? Memo Undermines Sterling – UK Government denies connection to note
  • GBP Forecast: Brexit Uncertainty Returns – Markets look ahead to government’s Supreme Court challenge
  • EUR Forecast: Recovery Possible for Euro – Populism fears could limit advances however

Pound Sterling Euro 2016 Exchange Rate Continues Advance Attempts on Thursday

Despite trending flatly for much of the day, the Pound Sterling Euro 2016 exchange rate trended as high as 0.5% above the day’s opening levels at some points on Thursday afternoon thanks to lingering optimism from the day’s solid UK retail sales scores.

The Eurozone’s Consumer Price Index (CPI) results offered the Euro little support. Monthly inflation came in at a slow 0.2%, disappointing expectations of 0.3%.

While year-on-year October inflation beat preliminary results of 0.4% with a final figure of 0.5%, Euro trade was slightly undermined by negative correlation to the strong US Dollar once more on Thursday. This made it easier for GBP EUR to touch on its best levels since mid-September.

(Previously updated 12:47 GMT 17/11/2016)

The Pound Sterling Euro 2016 exchange rate attempted to advance on Thursday morning but has struggled due to mixed reaction from Thursday’s shockingly good UK retail sales report.

Britain’s October retail sales figures beat expectations by more than just a bit: monthly retail sales were up 2.0% on September’s 0.1%, and year-on-year figures improved from 4.0% to an impressive 7.6%.

However, some analysts warned that this could be part of a final retail rush as consumers attempt to beat the inevitable price increases that will be caused by the Pound’s plummet in value. As a result, Sterling’s bullishness was limited.

(Previously updated 16:14 GMT 16/11/2016)

Pound Sterling Euro 2016 Exchange Rate Recovers on Wednesday

After emerging from its Tuesday lows overnight, the Pound Sterling Euro 2016 exchange rate had fully recovered by Wednesday midday and spent the rest of the day trending with an upward bias, largely due to weakness in the Euro.

While the US Dollar’s bullishness thinned, increasingly high Federal Reserve rate hike bets meant markets favoured USD to EUR, leaving the Euro to weaken through negative correlation. Concerns about populism rising in the Eurozone as well as calls from the European Commission for more fiscal stimulus throughout the Euro bloc also weighed on single currency demand.

This allowed Sterling to more easily hold its ground and occasionally edge higher throughout Wednesday despite the morning’s mixed employment results.

While September’s unemployment rate unexpectedly improved to 4.8%, analysts were concerned that average wages didn’t improve as expected.

October’s jobless claims report also came in far worse than expected. October’s score was a shockingly high 9,800 new claimants, while September’s was revised from 700 to a concerning 5,600.

(Previously updated 14:08 GMT 16/11/2016)

Wednesday morning saw little change for the Pound Sterling Euro 2016 exchange rate. GBP EUR rebounded from Tuesday’s lows overnight, but after it recovered to above 1.16 the pair trended more flatly.

Despite optimistic September employment stats, the Pound was weighed on throughout the morning by ongoing Brexit concerns as well as fears that employment would finally be hit by the Brexit vote in the coming months.

(Published 07:00 GMT 16/11/2016)

The Pound Sterling Euro 2016 exchange rate plummeted on Tuesday as uncertainty surrounding Britain’s process to leave the European Union weighed on markets once again. Low UK inflation scores hindered trader bullishness on the Bank of England (BoE) which also weighed on Sterling.

GBP EUR saw one of its largest falls in over a week, falling from the week’s opening levels of 1.16 to as low as 1.15. The pair appeared to hold its ground above key support levels, but ultimately lost around a third of last week’s impressive rally.

Pound (GBP) Undermined by Supposed Government Brexit Memo

Sterling was one of last week’s best performing currencies, bullish on hopes of closer UK-US trade relations under US President-elect Donald Trump’s upcoming administration.

However, as analysts perceived the Pound’s rally as having been overbought, this movement quickly cooled when markets opened on Monday. Sterling was sold from its best levels throughout the day, making it difficult for it to even advance against Monday’s weak Euro.

The Pound’s downtrend continued on Tuesday, this time undermined by the day’s domestic news which reminded traders of just how uncertain Britain’s economic situation was to be in the coming months and years.

Markets opened on Tuesday morning to news that a memo had been leaked from the UK government’s cabinet office, stating that the government still had no concrete plan on how it would tackle Brexit – with under five months to go until Prime Minister May’s proposed March 2017 date to begin the process.

While Downing Street officials denied the report’s validity, it was enough to send markets into a panic on Tuesday. BBC political editor Laura Kuenssberg stated;

‘Whoever is right, the document does matter because it underlines what we have reported and others have written about many times.

Five months after the referendum, the cabinet is struggling to agree a common position on what “Brexit means Brexit” really means.’

Other factors weighed on the Pound throughout Tuesday, including news that Britain’s October Consumer Price Index (CPI) had unexpectedly slowed to 0.9% year-on-year, as well as assertion from Bank of England (BoE) Governor Mark Carney that he would not extend his tenure as Governor past 2019.

Euro (EUR) Recovers Despite Slowing Growth in Germany

After performing poorly in reaction to Trump’s US election win last week as well as ongoing fears about populist protectionism rising in Eurozone countries, the Euro saw something of a relief rally on Tuesday.

Being bought up from its lowest levels, the Euro was easily able to advance against Tuesday’s weak Pound causing GBP EUR to lose almost a cent in value on the day.

Demand for the Euro may have been slightly dampened by the day’s mixed Eurozone ecostat results, but these were ultimately not enough to prevent investors from buying back into the single currency.

Germany’s Q3 Gross Domestic Product (GDP) figures came in worse-than-expected in preliminary prints, slipping from 1.8% to 1.7% year-on-year and from 0.4% to 0.2% quarter-on-quarter.

However, Italy’s growth scores were comparatively impressive. The year-on-year figure beat 0.8% expectations and climbed to 0.9% while quarterly growth improved from 0.0% to 0.3%, surpassing the expected 0.2%.

The Eurozone’s overall Q3 preliminary growth stats came in at 1.6% year-on-year as expecting, indicating that growth was on track. ZEW’s November economic sentiment survey also impressed, improving from 12.3 to 15.8.

Pound Sterling Euro 2016 Exchange Rate Forecast: Brexit Uncertainty to hold GBP at Bay

Despite last week’s Sterling bullishness spurring speculation that Trump’s election win had removed some Brexit pressure from the Pound, Tuesday trade indicated that Brexit uncertainty was still a significant downside factor to Pound Sterling Euro 2016 exchange rate trade.

Regardless of whether or not Tuesday’s Brexit memo was legitimate, it served as a reminder to UK markets that the Brexit process was a key point of uncertainty in Britain’s short to long-term economic outlook.

Concerns that the UK government could struggle to make a success of its Brexit process will continue to weigh on GBP strength and UK economic optimism as a result. This could continue to limit the Pound’s advances.

For the next key development in the Brexit process, markets will be looking ahead to December’s Supreme Court hearing at which the UK government will appeal that it has a right to activate Article 50 without input from Parliament.

The Euro, on the other hand, could continue its modest recovery but this may be limited if analysts continue to suggest that protectionist populism will rise in the Eurozone.

Wednesday’s session will see the publication of Britain’s October jobless claim figures and September 3-month employment results.

However, if Brexit uncertainty continues to weigh on Sterling and the Euro’s recovery continues, the Pound Sterling Euro 2016 exchange rate could continue to lose last week’s gains in the coming days.