GBP/EUR Edges Up Slightly, Still Largely Flat as Week Ends
- Pound (GBP) Bullish Despite Economic Worries– Third industrial recession in 8 years
- Euro (EUR) Left Uninspired– Poor Thursday Eurozone data leaves Euro in cross-flows
- ‘Super Thursday’ Leaves Pound Stronger – Investors surprised by unanimous decision
- Update: Eurozone GDP Disappoints– But German GDP impresses
- Forecast: UK CPI Next Week– GBP/EUR investors look ahead to Tuesday
The Pound to Euro exchange rate continued to attempt advances as Friday’s session drew to an end but was still only narrowly above the day’s opening levels.
Overall, GBP/EUR looks to have gained around 60 pips throughout the week, hitting a low of 1.2618 and a high of 1.2740, while trending narrowly in the region of 1.2715 throughout Friday.
Sterling may have strengthened slightly on further decreased ‘Brexit’ bets. News that the International Monetary Fund (IMF) had joined the debate and come out in support of the ‘Remain’ campaign was reported by the BBC on Friday.
Mixed Eurozone GDP Leaves GBP/EUR Holding Steady
The Pound Sterling to Euro exchange rate may be set to trade flatly into the weekend as the Eurozone’s mixed Gross Domestic Product (GDP) reports leave investors uninspired on the weak Euro.
While Sterling may be unlikely to make further gains on ‘Super Thursday’s news, Germany’s better-than-expected preliminary GDP scores were unable to hold it down. German GDP improved from 0.3% to 0.7% quarter-on-quarter and from 1.3% to 1.6% year-on-year.
However, general Eurozone data weighed on the Euro’s chances of advancing as figures expected to hold steady instead slowed. Eurozone GDP slowed from 0.6% to 0.5% quarter-on-quarter, and from 1.6% to 1.5% year-on-year.
GBP/EUR Settles after Bullish ‘Super Thursday’
The Pound looks to end ‘Super Thursday’ well up on opening levels as investors reacted with optimism towards the Bank of England’s (BoE) latest decision to unanimously leave rates frozen.
However, as ‘Brexit’ debates continued to dominate headlines in the wake of the BoE’s latest warnings, investors readjusted their positions to remain wary on Sterling. The BoE warned that a ‘Brexit’ could be the greatest risk to the UK economy.
GBP/EUR could also see considerable movement during Friday’s session with investors now looking ahead to Friday morning’s highly anticipated Eurozone datasets.
Key Eurozone Gross Domestic Product (GDP) is forecast to hold steady at 0.6% month-on-month and 1.6% year-on-year. German GDP is projected to accelerate in its monthly print, but slow year-on-year.
‘Super Thursday’ Sends GBP/EUR Higher
Despite ongoing British economic concerns and repeated ‘Brexit’ warnings, the Pound made a swift gain against the Euro in response to ‘Super Thursday’.
So named because of the Bank of England’s (BoE) slew of economic announcements, investors reacted with hawkish surprise to a unanimous decision to leave the UK’s key interest rates frozen.
Investors had been wary that at least one BoE policymaker would vote to cut rates. However, all 9 decisions opting to leave rates frozen indicated a confidence in the current rate despite Britain’s piling economic concerns.
The BoE lowered its 2016 growth forecast from 2.2% to 2.0%, followed by an official statement calling a potential ‘Brexit’ the biggest risk to British growth.
The GBP/EUR exchange rate could experience significant volatility later today as the Bank of England (BoE) delivers its latest interest rate decision, policy meeting minutes and inflation report.
Given the current climate and ongoing Brexit concerns, some economists are expecting that at least one member of the Monetary Policy Committee (MPC) will vote to cut interest rates this time out.
Such a move could put the Pound under heavy selling pressure and send the British currency lower against rivals like the Euro.
Before the BoE announcements the GBP/EUR exchange rate was trending in the region of 1.2647.
The Pound Sterling to Euro (GBP/EUR) exchange rate slipped back towards the week’s opening levels on Wednesday as Britain was hit by yet more economic warnings, leaving the uninspired Euro to sail upward on cross-flow winds.
Despite reaching a new daily high of 1.2709 first thing on Wednesday morning, investors began to fear that the UK’s economic concerns would only worsen and the Pound dropped once more, by around -0.4%. At the time of writing, GBP/EUR trended in the region of 1.2642.
Pound (GBP) Investors Grow Concerned after Industrial Recession News
Sterling’s movement has been mixed thus far this week, with investors eager to profit-take from the undervalued Pound but hesitant to buy the Pound as economic warnings continue to be released ahead of ‘Super Thursday’ this week.
Following Tuesday’s news that the UK trade deficit had reached its widest sum since the 2008’s recession levels, Wednesday’s production news had similarly bearish implications for Britain’s economy.
March’s Industrial production improved from -0.2% to 0.3% month-on-month disappointing forecasts of a 0.5% growth, while production avoided the forecast -0.4% year-on-year contraction by contracting from 0.1% to -0.2%.
Manufacturing production, on the other hand, let down forecasts of improving from -0.9% to 0.3%, by only scoring 0.1% month-on-month. Its yearly score met projections that its contraction would worsen from -1.6% to -1.9%.
UK industry shrank overall for the second quarter in a row, according to a BBC report, leading it into its third recession in eight years.
With this week’s news drudging up memories of the last decade’s financial crisis, investors are wary on the Pound. However, NIESR’s latest GDP estimate indicates that growth could hold steady at 0.3% leading into April, despite April’s poor PMI scores.
Euro (EUR) Remains Limp on Light Eurozone Data Calendar
With the Eurozone largely lacking data during Wednesday’s session, besides light Portuguese data showing an improvement from 0.4% to 0.5% year-on-year, the GBP/EUR exchange rate was left to Pound-related movements and currency cross-flows.
The Euro’s movement was previously mixed on Tuesday due to disappointing German industrial production data being released alongside positive German trade balance reports.
Industrial production had slipped from 2.0% to a low 0.3% year-on-year. However, the trade surplus surprised investors by widening from 20.2b to 26.0b.
As a result of the positive German trade reports, the shared currency was considered largely favourable to the Pound during Wednesday’s session, which saw Britain continuing to be marred by economic concerns.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: So-Called ‘Super Thursday’ Ahead
Thursday looks set to be Thursday’s most vital day for GBP/EUR movement, with key reports due from both Britain and the Eurozone.
Releasing in the morning is Germany’s April wholesale price index reports, followed by anticipated Eurozone industrial production scores.
Currently, Eurozone industrial production is expected to remain stagnant at February’s score of -0.8% in its monthly print, though the Euro could advance if these scores release above expectations.
As for Britain’s ‘Super Thursday’, the Bank of England (BoE) will be announcing its latest interest rate and asset purchasing decisions in the early afternoon.
While the decisions alone are unlikely to inspire Sterling movement with rates widely forecast to remain frozen, the bank’s policymakers could heavily indicate which options could pan out following June’s EU referendum. Some analysts anticipate details will be given on measures to be taken in the event of a ‘Brexit’.
Perhaps more vitally, the BoE is due to release its latest inflation report alongside its rate decisions, which could serve to throttle the Pound’s defences if it reflects current concerns towards Britain’s economy.