GBP/EUR Sustains Weekly Gain
After Thursday’s big data session left investors uninspired, Friday saw the GBP/EUR exchange rate almost completely unmoved and the pair was trending in the region of 1.2550 as the weekend approached.
Thursday’s comparatively optimistic Eurozone CPI failed to ignite the weakened Euro and a dull Bank of England (BoE) left the Pound without a fire.
Friday’s low-impact and vaguely disappointing data releases of UK construction output and Eurozone trade balance also left the pair without any discernible rally.
However, GBP/EUR is ultimately up around 160 pips from last week’s levels after a run of trading sessions which have been quite kind to Sterling.
Pound (GBP) Down Slightly, Largely Unaffected by BoE
With many analysts expecting exactly what the Bank of England (BoE) delivered, investor reaction to the announcement was limited and left the GBP/EUR pair fluctuating slightly rather than falling down.
The central bank confirmed a unanimous decision to hold rates at 0.50% and issued a series of warnings relating to the dangers a ‘Brexit’ could inflict on the UK economy.
Policymakers also mentioned for the first time that the vote was negatively affecting business decisions in the region, perhaps referencing Tata Steel.
GBP/EUR fell slightly on Thursday in response to optimistic Eurozone CPI, which escaped negative territory to score 0.0% despite forecasts of -0.1%.
BoE Decision Ahead – Dovish Comments Could Drive Pound (GBP) Lower
Ahead of the Bank of England’s (BoE) latest interest rate decision, the Pound to Euro (GBP/EUR) exchange rate was trending in the region of 1.245 – down 0.3% on the day’s opening levels.
If the BoE adopts a dovish tone today and chooses to fixate on the potential implications of a ‘Brexit’ the Pound could shed this week’s gains against the common currency.
The Eurozone’s inflation data is also likely to have an impact on GBP/EUR trading.
GBP/EUR Jumps on Poor Eurozone Industrial Production
In its third daily gain in a row, the Pound has continued to take advantage of the Euro’s current weakness after February’s Eurozone industrial production report revealed disappointing figures.
The key year-on-year print scored a disappointing 0.8% despite predictions of 1.3% and a healthy 2.9% in the report’s previous release.
The GBP/EUR pairing has gained around 0.5% during Wednesday’s session. Going forward, investors are likely to be gearing up in anticipation for Thursday’s Eurozone CPI and Bank of England (BoE) announcements.
Opinion Poll Puts LEAVE Camp Ahead in EU Referendum, GBP/EUR Trims Gains
After rallying to a best rate of 1.25 off the back of better-than-forecast UK inflation data, the Pound Sterling to Euro (GBP/EUR) exchange rate failed to hold its advance as a poll conducted by ICM put the ‘leave’ camp ahead in the run up to the EU referendum.
According to the poll, the ‘leave’ camp now holds a 45% to 42% lead on the ‘remain’ campaign.
Rising ‘Brexit’ bets undermined demand for Sterling and saw the currency soften before the close of the European session.
However, GBP/EUR returned to 1.2550 on Wednesday ahead of the release of Eurozone industrial production figures.
- IMF Issues ‘Brexit’ Warning – UK leaving the EU could cause ‘severe’ global damage
- Pound Leaps on Strong CPI – GBP/EUR hits new week-high on UK inflation
- Euro Weak on ECB Concerns – Mixed reactions towards European Central Bank easing
- Forecast: GBP/EUR Volatility Could Worsen – ‘Brexit’ and ECB concerns leave investors wary.
The Pound Sterling to Euro (GBP/EUR) exchange rate experienced its second spike of the week on Tuesday with the recently weak Pound making surprisingly bullish progress.
Unfortunately, various issues in the global economy could have interrupted the Pound’s rally, as the GBP/EUR pair began to sag after reaching a best level of 1.2554 during Tuesday’s session.
Despite trimming its advance, the Pound’s gains have still been fairly impressive since markets opened this week, with the currency climbing around 100 pips against its European rival. At the time of writing, the pair trended in the region of 1.2509
‘Brexit’ Fears Return as IMF Sees Potential for ‘Severe Regional and Global Damage’ if UK Leaves the EU
Tuesday’s highly anticipated International Monetary Fund (IMF) Statements have come and gone, with the organization adopting a thoroughly dovish tone across the board in terms of the outlook for international economies.
The possibility of a ‘Brexit’ has already been called the largest risk to the UK economy by Bank of England Governor (BoE) Mark Carney, but now the IMF has thrown its hat in the ring by warning of ‘severe’ damage to the global economy if the UK were to indeed leave the European Union.
The organization argued that the referendum’s imminence has already knocked uncertainty into investors and weakened the Pound by extension, a situation that would only worsen if a ‘Brexit’ occurred.
The IMF also cut its previous UK growth estimates. While the institution predicted back in January that Britain would grow 2.2% through 2016, it now only expects the UK to grow by 1.9% this year.
However, the doom and gloom seems to have not hurt the Pound considerably as it holds onto its CPI-influenced gains. Tuesday morning’s Consumer Price Index (CPI) reports showed inflation improvements of at least 0.2% in every key print, higher than the expected increases of 0.1%.
Euro (EUR) Exchange Rate Weighed Down by ECB and IMF Dovishness
Despite final German inflation data matching forecasts, Eurozone and Euro sentiment seems to have taken a hit this week following the release of the European Central Bank’s (ECB) latest meeting minutes.
Inspiring mixed feelings in investors, the minutes detailed a series of different easing measures discussed by the central bank, many of which could be implemented if current easing does not stimulate the Eurozone economy.
Some German officials have taken issue with the ECB’s easing, blaming ECB President Mario Draghi for a perceived increase of right-wing, anti-immigrant attitudes and right-wing party support in Germany.
An increasing amount of investors have also argued that the possibility of Britain leaving the European Union would cause considerable ecopolitical damage to the Eurozone, a sentiment that was supported by today’s IMF statements.
As a result, considerable uncertainty surrounds the Euro this week, with investors wary of settling on it so long as ECB criticisms and ‘Brexit’ worries reaching the currency bloc continue.
Pound to Euro Exchange Rate Forecast: GBP/EUR Likely to Fluctuate
Thus far, the Pound has begun and sustained a slight recovery against its European rival this week, with the GBP/EUR pairing moving away from a near two-year low. However, with data taking a backseat on Wednesday, imminent GBP/EUR movements are more likely to be weak and influenced by global ecopolitical events.
Eurozone industrial production data is due for release tomorrow morning, with February’s figure currently predicted to have slowed year-on-year from 2.8% to 1.3%.
ECB policymakers are expected to give speeches throughout the day and may indicate whether or not the central bank will respond to German critics.
With data otherwise silent until Thursday’s session (which will see Bank of England decisions and Eurozone CPI), investors may begin to look further into the IMF’s warnings as they settle on the GBP/EUR pair.