The Euro has seen a small drop against the Pound today, in the lull before an important vote to decide the future direction of the Eurogroup.
- EUR GBP rate drops to 0.8828 – GBP EUR trades up at 1.1326
- Euro declines before vote on Eurogroup leader – Four diverse candidates in the running
- Pound trades higher as construction sector surges – Fastest pace of growth seen in five months
- Will Euro firm on Draghi speech? – GBP volatility possible on May-Juncker meeting
On the other side of the pairing, the Pound has made cautious gains after news of construction sector growth.
EUR/GBP Rate Slips on Eurogroup Fears and Mixed Eurozone Data
Domestic data has consisted of news that Spanish unemployment has risen in November, although consumer confidence has also risen during the month.
Less supportively, Greek GDP growth has declined in the third quarter, having previously made encouraging movement in Q2.
The main issue today is the Eurogroup vote on its next leader, who could dramatically shape the future course of the influential Eurozone body.
Pound Euro Rate Rises after Signs of UK Construction Sector Growth
News about the UK’s construction sector has bolstered the Pound today, triggering a small advance against the weaker Euro.
The UK construction sector has seen a dramatic recovery in November, with the activity index rising from 50.8 points to 53.1, above the anticipated 51 point reading.
According to historical figures, this was the fastest reported level of growth seen in five months.
Responding to the good news, IHS Markit Associate Director Tim Moore said;
‘UK construction companies experienced a solid yet uneven improvement in business conditions during November.
Once again, resilient house building growth helped to offset lower volumes of commercial work and civil engineering activity.
Construction firms reported that heightened economic and political uncertainty continued to hold back commercial development activity’.
Another commentator was Duncan Brock of the Chartered Institute of Procurement and Supply, who remarked;
‘Overall, the sector showed an incremental improvement, but business optimism was on the rise and up from last month’s five-year low.
Perhaps the darkest days are behind the sector with fresh impetus on the horizon for the New Year’.
Turbulence ahead for EUR GBP Exchange Rate on Eurogroup Leaders Vote
The Euro and the Pound could turn volatile later today, depending on the outcome of a Eurogroup meeting and Brexit talks.
In the former case, Eurogroup leaders will be meeting today to vote on the next leader of the institution.
Current leader Jeroen Dijsselbloem will be stepping down in early 2018 and his potential successors hail from Portugal, Luxembourg, Latvia and Slovakia.
The expectation is that Portuguese candidate Mario Centeno will win the vote, which could lead to a Euro to Pound rise.
Centeno is considered to be a stable option for leading the Eurogroup, so his governance could strengthen the Eurozone and by extension the Euro.
European Central Bank (ECB) President Mario Draghi will also be giving comments today, which could also have a significant impact on the Euro to Pound rate.
In the UK, traders are primed for a meeting between PM Theresa May and European Commission President Jean-Claude Juncker.
May is expected to discuss the UK’s current progress in Brexit talks with Juncker, although there were no reported breakthroughs over the weekend.
If both figures leave the meeting in good spirits and suggest that Brexit talks could get moving in the coming weeks, the Pound might appreciate against the Euro.
Current Interbank EUR GBP Exchange Rates
At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.8824 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.1330.