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EUR/GBP, EUR/USD Exchange Rates Edge Higher despite Geopolitical Tensions

  • Euro exchange rates tick higher
  • Pound Sterling cools ahead of industrial and manufacturing proiduction data
  • US Dollar exchange rates holding steady
  • Euro forecast to fluctuate

Euro (EUR) Exchange Rates Tick Higher despite Absence of Data

Despite a complete absence of domestic data to provoke volatility, the Euro edged higher versus both the Pound and the US Dollar. The appreciation is likely to be liked to traders taking advantage of the Euro’s low trade weighting. Additionally, predictions of long -term delays to a Federal Reserve rate hike and easing fears regarding ‘Brexit’ have also contributed to the Euro uptrend. This is despite ongoing concerns regarding Greece and fears that the Hellenic nation will flirt with the notion of exiting the Euro.

The British Pound is likely to see significant volatility in response to manufacturing and industrial production data. US data will be less impactful so market sentiment is likely to drive USD changes.


Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Tick Fractionally Lower after German Industrial Production Slowed Beyond Expectations

The Euro to Pound Sterling (EUR/GBP) exchange rate edged lower by around -0.3% on Monday afternoon.

European ecostats produced a mixed-bag of results, which caused the Euro to trend statically versus most of the majors but gain against high-yielding assets amid risk-off trade. Whilst the German Current Account grew beyond expectations in March, with trade balance meeting the market consensus in the same month, Germany’s Industrial Production growth slowed well beyond expectations. In response to the Industrial Production figure, Pantheon Macroeconomics said;

‘Overall, though, the downbeat headline is not enough to change the story of rising production in Q1 as a whole. This points to a strong GDP print later this week, and suggests that the consensus’ prediction of an upbeat 0.6% quarter-on-quarter is within reach.’

The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7877.

Meanwhile, the British Pound edged higher versus a number of its major peers, although appreciation has been limited. The uptrend was initiated by positive trade balance data, micrifying a less-than-ideal BRC Like-For-Like sales report.

March’s Total Trade Balance was forecast to see the deficit reduced from -£4300 to -£4200, but the actual result dropped to -£3830. The Office for National Statistics said;

‘The narrowing of the trade in goods deficit between February 2016 and March 2016 reflected an increase in exports of £0.4 billion to £23.7 billion; mainly attributed to a rise in unspecified goods and machinery and transport equipment.’

However, March’s headline trade figure masks underlying weakness which was highlighted by the quarterly reading which showed the trade deficit widened to its highest level in eight years.

‘Brexit; uncertainty continues to be at the forefront of traders focus, but the British Pound has been little affected by the latest news that showed the gap between those in business wishing to remain and leave has narrowed. This is likely due to traders fearing that mistakes have been made in the past with regards to majorly speculative trade.

The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within the range of 0.7868 to 0.7904 during Monday’s European session.

Euro to US Dollar (EUR/USD) Exchange Rate Forecast to trend Narrowly ahead of US Wholesale Inventories

The Euro to US Dollar (EUR/USD) exchange rate was trending within a tight range on Monday afternoon.

Although the Euro has not been as negatively impacted by the EU referendum as the Pound, the drag of uncertainty on the common currency is begging to grow. Many key global figureheads and international business heads have stated that the impact on the UK if citizens vote to leave will be negative. However, many of those same officials have also suggested that a UK exit would be worse for Europe, especially if it triggers a domino effect.

‘Internationally, the more common view is that the UK would suffer less than the EU from the break-up,’ said Bobby Duffy of Ipsos Mori’s Social Research Institute. Europeans ‘feel there is likely to be a ripple effect following the UK vote’ and this ‘lends a sense that even if the vote is to stick with the status quo in June, it will not be the end of the EU’s challenges.’

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1386.

Over the pond, the US Dollar is trending statically versus most of its major peers as traders await domestic data. A speech from Federal Reserve official William Dudley had minimal impact on the USD has he steered clear from domestic policy.

Although safe-haven demand is currently dominating trade, thanks to global stocks volatility and fears regarding China’s economic woes, the US Dollar has not benefitted from risk-off trade. This is due to concerns regarding long-term delays to a Federal Reserve benchmark rate hike.

Fed policymakers have cited a number of reasons for delaying a cash rate increase. The latest sore point for policymakers is the UK’s EU referendum. Chairwoman Janet Yellen has made it clear there is no intention to tighten policy until after the conclusion on June 23rd.

The Euro to US Dollar (EUR/USD) exchange rate was trending within the range of 1.1357 to 1.1410 in the early stages of Monday’s European session.