The Euro capitalised on a weak Pound last week and could make further gains this week, given the number of Sterling-weakening events that are incoming.
- EUR GBP up from 0.86 to 0.87 last week – GBP EUR dropped from 1.15 to 1.14
- German confidence set to rise – Will Eurozone inflation hit 2%?
- Eurozone trade stats to close week’s trading – Major UK jobs figures due Wednesday
- Pound slump expected on Article 50 trigger – BoE may offer bleak forecast on Brexit
The main boost for the Euro last week came when European Central Bank (ECB) President Mario Draghi surprised traders and economists by painting an optimistic picture of future Eurozone performance.
In the coming week, the Euro could repeat last week’s rise against the Pound, given the spread of optimistically-forecast Eurozone releases.
The first major announcement will be Tuesday’s Eurozone and German ZEW confidence scores in March. For Germany at least, current conditions and economic sentiment measures are both forecast to rise to the Euro’s benefit.
Data-wise, Wednesday’s main contribution will be Q4 Eurozone employment stats. More notable, however, will be the week’s wildcard event, the Dutch general election.
Largely seen as a preview before the later French and German elections, the Dutch election may be a close-fought event, which is only likely to lower Euro demand.
Based on polling data, defending pro-EU party the VVD are predicted to claim victory against their Eurosceptic rivals the PVV.
This outcome could boost Euro demand, though even with a VVD victory it is thought that a disparate mix of parties will be needed to form a ruling coalition.
As well as the Dutch election aftermath on Thursday, the Euro could also be moved by final inflation rate figures for February.
Forecasts have been for the annual figure rise to 2%, which could trigger a sharp Euro uptrend as it will match with the European Central Bank (ECB) inflation target.
Ending a busy week on a potentially quiet note will be Friday’s Eurozone trade balance; previously, a notable surplus of 28.1bn was seen.
The main UK news this week will come on Wednesday and Thursday, starting with the possibly Pound-shattering Article 50 trigger.
While not officially confirmed, this is broadly tipped to come on the 15th and is likely to rapidly erode the Pound’s value as it cuts off any chance of the UK staying in the EU.
More concretely, UK jobs stats are also due on Wednesday and as average earnings are forecast to fall, the Pound is set to drop further against the Euro in the event.
Sterling may have a bleak end to the week on Thursday, which will bring the month’s Bank of England (BoE) interest rate decision.
If Article 50 has been triggered by then, BoE Governor Mark Carney may have some choice and gloomy words when forecasting future UK economic performance.
Recent EUR GBP Interbank Exchange Rates
At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.87 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.14.