- Pound Sterling Euro Exchange Rate Near 1.17 – Recovery slows
- UK Inflation Solid in March – Sterling trends flatly
- UK Job Stats Mixed – UK wage growth slows as feared
- Forecast: Eurozone Inflation Next Week – UK retail stats next Friday
Pound Sterling Euro Exchange Rate Remains Near Highs on Thursday
Thursday’s European session saw little change in the Pound Sterling Euro exchange rate. The pair remained in the upper regions of 1.17 throughout the day as the day’s news had little effect on other currency.
The Pound’s movement is likely to cool in the coming week due to a longer Easter weekend in Britain and a quiet economic calendar.
The Euro, on the other hand, is in for a comparatively busy time. Eurozone inflation stats will be published on Wednesday but even if these impress the Euro could be weakened by French Presidential election jitters.
The 2017 French Presidential election begins on the 23rd of April, meaning the shared currency is likely to be highly volatile next week.
[Previously updated 12:47 BST 13/04/2017]
After briefly slipping from its monthly highs on Wednesday night, the Pound Sterling Euro exchange rate tested those highs again on Thursday morning.
While GBP EUR has failed to hit the key level of 1.18 so far, it has gotten close and remains high in the 1.17 range on Thursday.
The Pound lacked the momentum to continue gaining against the Euro due to slowing wage growth. Political jitters also cooled slightly on Thursday.
The Euro’s movement was little changed by Thursday’s German inflation stats – which simply met projections. German inflation came in at 0.2% month-on-month and 1.6% year-on-year in March.
[Previously updated 16:44 BST 12/04/2017]
Pound Sterling Euro Exchange Rate Tests Monthly Highs on Wednesday
The Pound Sterling Euro exchange rate trended relatively tightly on Wednesday.
Sterling held most of this week’s gains and trended in the region of 1.17 as political jitters weighed on the Euro. GBP EUR briefly touched on its best level since February on Wednesday afternoon.
Thursday’s European session will see the publication of Germany’s final March Consumer Price Index (CPI) data. If it beats expectations, GBP EUR could shed some of this week’s gains.
However, unless political uncertainty fades considerably the Pound to Euro exchange rate could be in for a week of gains.
[Previously updated 13:00 BST 12/04/2017]
The Pound Sterling to Euro exchange rate’s advances slowed on Wednesday, as Britain’s latest employment data revealed that UK wage growth continued to slow in February.
Analyst are now increasingly concerned that slowing wage growth and rising inflation could lead to a notable drop in UK consumer activity, which could dent the growth of Britain’s economy in 2017.
Despite these concerns, GBP EUR largely held its ground on Wednesday. Political uncertainty continued to weigh on the Euro, allowing GBP EUR to trend in the region of 1.17 and sustain most of its Tuesday gains.
[Published 06:00 BST 12/04/2017]
Tuesday saw the Pound Sterling to Euro exchange rate trend flatly as the day’s UK inflation data was not impressive enough to inspire strength in the British currency. Wednesday could see GBP EUR influenced by Britain’s latest employment data.
GBP EUR began the week trading at the level of 1.16. While the pair recovered to the level of 1.17 on Monday and stayed there on Tuesday, it remains around half a cent below the highs seen last week.
Pound (GBP) Flat Despite Solid Inflation Data
The Pound firmed on Monday as investors priced Tuesday’s expected UK inflation figures into the Pound. As a result, Sterling saw no shift in movement when Tuesday’s Consumer Price Index (CPI) report largely met expectations.
Britain’s year-on-year inflation results were predicted to remain at 2.3% – and they did. The month-on-month print was slightly more impressive, coming in at 0.4% over the forecast 0.3% though it still fell from February’s result of 0.7%.
The slightly better-than-predicted results were enough to have GBP EUR hold its ground at 1.17 throughout Thursday, but not enough to boost the Pound further.
Analyst reactions to the report were mixed but they generally expect inflation will surge again in April, due to the timing of the Easter holiday this year.
Concerns are generally rising among analysts that inflation will increasingly be squeezing UK households in the coming months too. James Smith, economist from ING Bank;
‘UK inflation stayed at 2.3% year on year in March, which when compared to wage growth (which is likely to slow in data released tomorrow), means real incomes could be starting to fall. …
Overall, we think that the effect of the weaker pound and higher fuel costs will drive inflation above 3% in the second half of this year…In tomorrow’s jobs report, we expect wage growth (excluding bonuses) to fall back to 2% following some particularly weak “single month” figures recently. In real terms, that means that disposable incomes will be falling, and we are seeing some signs that this is hitting spending.’
As the Bank of England (BoE) has repeatedly indicated in recent months that it will overlook Pound value-related inflation when considering monetary policy, some analysts are becoming increasingly concerned that households will be unable to cope with mid to long-term inflation gains.
Euro (EUR) Sturdy as ZEW Surveys Impress
The Euro was able to hold its ground against the Pound on Tuesday, largely due to the day’s optimistic Eurozone economic sentiment surveys from ZEW.
ZEW’s Eurozone economic sentiment index improved from 25.6 to 26.3, despite being projected to slow to 25. ZEW’s German surveys also impressed. Economic sentiment improved from 12.8 to 19.5, beating the expected 14, while current conditions beat expectations and rose from 77.3 to 80.1.
As a result of the better-than-expected economic sentiment improvement, investors overlooked the day’s underwhelming Eurozone industrial production data from February.
However, political jitters continued to limit the Euro’s strength on Tuesday.
Eurosceptic far-left French Presidential candidate, Jean-Luc Melenchon, has quickly gained in popularity according to round one opinion polls. As a result, Euro traders are increasingly concerned that the winner of the election could take France out of the Eurozone.
Pound Sterling Euro Forecast: UK Job Data in Focus
Wednesday’s UK employment data could influence movement in the Pound Sterling to Euro exchange rate, particularly if it impresses.
GBP EUR could extend this week’s recovery attempts if Britain’s February employment change or unemployment rate results come in better than expected.
Currently, analysts predict the unemployment rate will remain at 4.7% and around 68k new jobs will have been made in the three months into February.
March’s jobless claims figures could also give the Pound some support if they impress.
However, if the UK job market performed worse than expected in February, GBP EUR could shed some of its Monday gains and trend near the week’s lows again.
Wednesday will also see Bank of England (BoE) Governor Mark Carney deliver a speech. If Carney makes any comments on this week’s UK inflation data it could have a considerable influence on Sterling.
The Euro is unlikely to see a notable shift in movement until Thursday, when Germany’s final March inflation data will be published. As a result, the Pound Sterling Euro exchange rate is likely to be driven by the Pound throughout Wednesday.