GBP/EUR Holds Opening Levels Following Bad Data Morning
After starting the day with a bullish advance, GBP/EUR has now fallen to hold opening levels thanks to the weakening effects of today’s data. UK CPI printed well on a yearly basis, but monthly growth fell further into negative territory than expected. However, GBP/EUR has managed to avoid further losses thanks to the terrible printing of the ZEW survey for the Eurozone and Germany. All three indexes depicted a huge drop in positive sentiment.
Pound (GBP) Strong ahead of UK Consumer Price Index Figures
Pound Sterling is currently trending in the positive region against the Euro ahead of today’s CPI release, currently expected to show a small uptick which, while only ten basis points, would be a very significant moment for UK inflation. The Pound is also helped by Euro weakness ahead of the key ZEW Economic Sentiment survey results for Germany and the Eurozone, which are expected to show that positive sentiment crashed in January.
Euro (EUR) Soft as German Top Court May Rule ECB Plans Are Against Constitution
Two top Eurozone courts could potentially lock horns over the European Central Bank’s (ECB) policy of doing ‘whatever it takes’ in order to bolster the economy. The German Federal Constitutional Court cannot affect the ECB’s actions directly, but it can issue orders to German authorities, including Bundesbank, which could curb ECB President Mario Draghi’s scope to increase asset purchasing. The move is a highly contentious one, criticised even by several parties who have admonished the EU courts for allowing Draghi to have a free reign.
It isn’t just Britain’s potential exit from the European Union that is causing movement in the GBP/EUR exchange rate today. UK ‘Brexit’ fears continue to influence Pound Sterling (GBP), however they have been countered by renewed concerns over a potential ‘Grexit’ which is helping to keep the Euro (EUR) weak ahead of a speech by Mario Draghi.
News that HSBC will Remain Headquartered in London Bolsters GBP/EUR Exchange Rate
After an extensive review, the executive board at HSBC has decided to leave the company headquartered in the UK. The move comes after Chancellor George Osborne made several concessions, including dropping plans to toughen up regulations over the accountability of senior bankers, which convinced the bank to remain in London rather than shifting its operations to Asia, its other large financial market.
According to a statement from HSBC, ‘The UK is an important and globally connected economy. It has an internationally respected regulatory framework and legal system, and immense experience in handling complex international affairs. London is one of the world’s leading international financial centres and home to a large pool of highly skilled international talent. It remains therefore ideally positioned to be the home base for a global financial institution such as HSBC.’
The news has helped to firm the Pound Sterling to Euro (GBP/EUR) exchange rate, which is currently trending in the region of 1.2938.
In positive news for the ‘Stay’ campaign, HSBC’s chairman Douglas Flint has added his voice to those of other major banks, including Deutsche Bank, Credit Suisse and Morgan Stanley, in claiming that Britain would be better off in the European Union.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Slumps Ahead of Mario Draghi Speech
The Euro has fallen ahead of another speech by European Central Bank (ECB) President Mario Draghi. The likelihood is that Draghi will again hint at the need for more stimulus in the Eurozone, especially after the stock market turbulence which has happened since he last spoke publicly. Appetite for the common currency is soft as investors wait for the outcome of his speech before making any investment decisions.
Also weighing on the Euro today is the news that Greece has fallen back into recession. Preliminary figures for the final quarter of 2015 showed a -0.6% contraction on the previous quarter, while year-on-year growth fell -2%. The European Commission forecasts a -0.7% contraction in Greek GDP during 2016, with 2.7% growth in 2017. The International Monetary Fund (IMF) have warned of the need to create a credible plan for rescuing the Greek economy if fears of a ‘Grexit’ are to be alleviated.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trading between 0.7712 and 0.7745.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Draghi Speech Approaches
The only UK data for the day was the Rightmove House Prices figures released earlier, which showed a rise in home values. The only key event for the Eurozone today is Mario Draghi’s speech, which has the potential to seriously strengthen or weaken GBP/EUR.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading between 1.2902 and 1.2963.