A lack of economic data from the Eurozone has seen Euro Pound and Euro US Dollar exchange rates advance as EUR benefits from weakness in GBP and USD.
- EUR GBP, EUR USD strong – Lack of data leaves overseas weakness driving Euro demand
- Carney decision helps support Pound – Markets confused by one-year term extension
- US Dollar falls as investors await data – US ISM predicted to rise
- EUR GBP, EUR USD exchange rate forecast – Euro could weaken if overseas data inflates risk appetite
Investors in the Pound are relieved, yet confused, by Mark Carney’s decision to stay as Bank of England (BoE) Governor for six years in total, while US traders are waiting for the day’s key data before adjusting their positions.
City Index Research Director; ‘Pound May Continue to Outperform the G10’
UPDATE, 16.54, 03/11/2016; Could the Pound be set to rally even further? Kathleen Brooks, the Research Director at City Index, certainly thinks so;
‘Although global markets remain at the mercy of the outcome of the US election, if Hillary Clinton does manage to win next week, then the pound may continue to outperform the G10. The Court ruling on Article 50 opens the door to a delayed Brexit, which seems a good enough excuse for the foreign exchange market to extend this pound rally further. The increase in the Bank of England’s inflation forecast could also keep upward pressure on UK Gilt yields, which are the building blocks of a stronger pound, in our view.‘
High Court Ruling Against Royal Prerogative Causes EUR GBP Collapse
UPDATE, 14.03, 03/11/2016; The government cannot invoke Article 50 without approval from Parliament, the UK’s High Court has just ruled. This opens up the potential for MPs to curb the government’s potentially more damaging plans for Brexit, or even block an exit completely. Pound exchange rates have raced higher in the wake of the ruling. The government has already taken steps to appeal the controversial decision, which has threatened to create an even wider rift between former supporters of the ‘Leave’ and ‘Remain’ campaigns.
Pound Strong ahead of High Court Brexit Ruling
UPDATE, 08.53, 03/11/2016; Pound Euro and Pound US Dollar exchange rates are holding a position of strength this morning ahead of today’s key developments. Anticipation of a policy freeze by the Bank of England (BoE) is keeping appetite for Sterling strong, with the current GBP weakness helping to make it an attractive investment. The markets are still largely short-positioned on the Pound, so the upwards movement seen today is also coming from traders buying back Sterling in order to realise their gains.
However, the approach of the High Court ruling on whether or not the government can trigger Article 50 without a Parliamentary vote could threaten to derail Pound gains.
Euro Advancing after Positive Eurozone Data
UPDATE, 09.32, 02/11/2016; A string of positive data releases is helping to lift the Euro today. Markit manufacturing PMIs largely advanced above forecast, with those that disappointed only registering a -0.1 point downtick. German unemployment figures significantly bettered estimates; unemployment was only expected to edge lower by -1,000 persons, but instead fell -13,000. This was enough to unexpectedly lower the joblessness rate from 6.1% to 6%.
However, the common currency is still mixed overall thanks to the potential for the current US election jitters to cause Eurozone bonds to become too expensive for the European Central Bank (ECB) to buy. This would create a serious problem for its quantitative easing programme.
Pound Tumbles as BAML Forecast Further 2017 Exchange Rate Weakness
UPDATE, 16.42, 01/11/2016; The Euro Pound exchange rate has extended gains to 0.8% now, after the Bank of America Merrill Lynch (BAML) forecast Sterling would fall to just $1.15, while the Euro would climb to 0.94 by the end of 2017 Q1.
Euro Goes Bullish Versus Pound and US Dollar
UPDATE, 12.35, 01/11/2016: The weakness in Pound Sterling and the US Dollar that has enabled the Euro to advance today has intensified, sending the common currency on a bullish charge. While the latest UK manufacturing PMI shows that the industry remains in a strong position, even as growth weakens, the fact that the majority of businesses highlighted rising price pressures as an issue has worried investors.
Empty Data Calendar sees Euro Advancing on Pound and US Dollar Weakness
With virtually no data due from the Eurozone today, combined with little in the way of domestic news, the Euro has been left rudderless. EUR GBP and EUR USD exchange rates are moving in response to the weakness in their quote currencies; the Euro is ticking higher versus the Pound, while making a more solid advance versus the US Dollar.
Meanwhile, markets are still mulling over the latest inflation and GDP data. Both printed in line with previous readings, as was forecast. The overall takeaway is that inflation and economic growth in the currency block are continuing to grow steadily; the pace is relatively slow, however, which is worrying many and contributing to downside Euro pressures.
Pound Euro, Pound US Dollar Mixed as Mark Carney Stays on as BoE Governor
Traders are largely relieved today that the Bank of England’s Governor, Mark Carney, intends to remain in his post until June 2019. After a swathe of recent criticism, including suggestions by Michael Gove that he needs to ‘curb his arrogance’, speculation had been mounting that Carney may decide to leave before his initial five year term expired in 2018.
After a two-hour meeting with the Prime Minister yesterday, which had been in the diary long before the speculation over Carney’s future began, the Bank of England has announced the Governor’s decision to remain. Leaving in mid-2019 will mean that Carney remains at the helm of UK monetary policy during the Brexit negotiations.
This has improved market confidence today, although the Pound remains mixed due to the uncertainty surrounding Carney’s motivations. Although his five year term would have ended in 2019, Carney had an option in his contract to serve until 2021, making the full term usually served by BoE Governors.
US Dollar Exchange Rates Fall ahead of ISM as RBA Decision Ignites Risk Appetite
Traders are reluctant to go long on the US Dollar this morning, thanks to the presence of the key ISM manufacturing index on the afternoon’s data calendar. Expected to edge higher from 51.5 to 51.7, the index could further strengthen the case for an interest rate increase in December, which would support the US Dollar higher. Until markets can get a clear picture, they are remaining put on the US Dollar.
Meanwhile, another rate freeze from the Reserve Bank of Australia (RBA) has sparked strong risk appetite, with investors turning away from safe-haven assets towards the high-yielding ‘Aussie’. The RBA indicated that its inflation and economic forecasts remained unchanged, while giving no hints of an easing bias, further raising market confidence that the current easing cycle is over.
Euro Pound, Euro US Dollar Forecasts; Global Data to Drive EUR Exchange Rates today
With nothing impactful left for either the Eurozone or the UK on the calendar today, the focus turns to international releases, including those from the US.
Investors are currently holding their positions on the US Dollar ahead of the day’s ISM manufacturing index, but if the forecast tick higher should materialise, there could be a flurry of demand for USD that undermines EUR appetite.
Should the day’s Canadian GDP and New Zealand unemployment data all print positively, the atmosphere of risk appetite created by the latest RBA decision could swell further. A proliferation of yield-hunting could therefore see demand for the relatively safer Euro and US Dollar fall.
Interbank EUR, GBP, USD Exchange Rates
The Euro Pound (EUR GBP) exchange rate is currently trading around 0.89, while the Pound Euro (GBP EUR) exchange rate is trending in the region of 1.11.
The Euro US Dollar (EUR USD) exchange rate is currently trading around 1.09, while the US Dollar Euro (USD EUR) exchange rate is currently trending in the region of 0.90.
The Pound US Dollar (GBP USD) exchange rate is currently trading around 1.22, while the US Dollar Pound (USD GBP) exchange rate is currently trending in the region of 0.81.
