- GBP EUR Exchange Rate Fluctuates Around 1.16 on Wednesday – Briefly dips to 1.15
- IFO’s German Business Survey Boosts Euro – German business confidence up in September
- Tuesday’s Data Fails to Influence GBP EUR – German import prices lower
- Update: GfK German Consumer Confidence Disappoints – GBP EUR flat
- Forecast: Key German Stats on Thursday – Includes unemployment and CPI figures
GBP EUR Exchange Rate Fluctuates Flatly on Wednesday
Despite hitting a high of 1.1640 and a low of 1.157 throughout the day, the GBP EUR exchange rate ended the day trending relatively flatly, around the key level of 1.16 as the European session drew to an end.
The day’s data did little to influence Pound Euro movement. GfK’s German consumer confidence report for October slipped from 10.2 to 10, but markets were generally too focused on developments with Germany’s Deutsche Bank issue.
Markets adjusted their positions on the Euro throughout the day as views on the situation shifted.
In the morning, speculation that the German government was drafting up a rescue plan for the bank group bolstered Euro demand. However, German officials were quick to deny these rumours. Ultimately, the Euro trended flatly, still low in demand but avoiding further selloffs amid commentary from some analysts that concerns about the bank’s issues had been overblown.
(Previously updated 16:48 BST 27/09/2016)
GBP EUR Exchange Rate Ends Tuesday’s European Session Near Weekly Best
The GBP EUR exchange rate extended its rebound on Tuesday afternoon, as investors made the most of the day’s quiet economic calendar to buy Sterling up from its cheapest levels. Towards the end of the European session, the pair was even able to reach levels as high as 1.16.
Concerns from Eurozone investors towards Germany’s Deutsche Bank crisis weighed heavily on the Euro on Tuesday afternoon, allowing many rivals such as Sterling to capitalise and advance.
After being given a US$14bn fine from the US for mis-selling mortgage-backed bonds before the 2008 financial crisis, markets have become increasingly unconvinced that the bank’s financial health will hold. Comments from German Chancellor Angela Merkel over the issue have also weighed on Euro appetite.
However, GBP EUR’s current strength is unlikely to last, due to Sterling lacking any footing based on strong data or domestic news. As a result, the pair could plunge back to its 2016 lows in the coming days – unless UK data impresses or Eurozone data disappoints.
(Previously updated 13:04 BST 27/09/2016)
GBP EUR Exchange Rate Rebounds from Lows on Tuesday
The Pound to Euro exchange rate fared a little better on Tuesday as the market’s Sterling selloff faded and the British currency was bought up slightly from its lowest levels.
Eurozone data was unable to inspire the Euro on Tuesday morning, as Germany’s producer prices came in at a low -0.2% month-on-month and only lightened from -3.8% to -2.6% year-on-year.
With markets now focusing on risk-correlated investments after Monday’s US Presidential debates, investors lost interest in selling off the Pound, giving the currency some space to make a limited recovery.
(Published 07:00 BST 27/09/2016)
The Pound to Euro exchange rate extended last Friday’s Sterling slump on Monday as UK traders continued to be anxious over the latest Brexit speculation. The Euro, on the other hand, was boosted by a better-than-expected German business confidence report from IFO.
GBP EUR lost about a cent in value during Friday’s session alone despite spending most of the week fluctuating, and had fallen to 1.1552 by the weekend. On Monday, the pair had lost another half a cent by the afternoon, and trended close to the level of 1.1500 towards the end of the day after hitting a new three-year-low of 1.1476.
Pound (GBP) Exchange Rates Weak on Hard Brexit Concerns
Last week’s UK market concerns seemingly lasted through into the new week, as investors continued to sell the Pound amid a lack of fresh economic data or news.
Hitting its worst post-Referendum levels against some major currencies, Sterling’s lows seemed to indicate that investors were not as confident on Britain’s economic resilience as they had been in early-September.
Sterling’s losses have been attributed to comments made over the last week by UK officials, hinting that Britain may give up on access to the European Union’s single-market after the Brexit process is complete. This would be what analysts are calling a ‘Hard Brexit’, or full Brexit.
This, as well as comments from UK foreign secretary Boris Johnson that the Brexit process could begin in early-2017, caused markets concern that a rushed Brexit process would leave Britain in an unfavourable trade-position. Bloomberg reported on the Pound’s weakness;
‘Sterling dropped versus all of its Group-of-10 peers amid concerns that the UK would surrender access to the European Union’s single market in return for securing control over immigration and being exempt from paying into the bloc’s budget.
The Pound was also weighed down as a survey of a 100 business leaders showed more than three-quarters of chief executive officers said they would consider moving their headquarters or operations outside Britain due to the UK’s vote to leave the trading bloc.’
Euro (EUR) Boosted by Uptick in German Business Confidence
Despite last week’s underwhelming and mixed Eurozone news, this week saw the Euro off to a good start as investors reacted with optimism towards IFO’s September German business confidence scores.
Last week caused some market concern towards Germany’s private sector, as Markit’s preliminary September Services PMI for the country came in well below expectations at 50.6.
However, if other German ecostats impress it could offset this concern slightly. According to Monday’s IFO results, business climate improved from 106.2 to 109.5 in September, while current assessment rose from 112.8 to 114.7.
Business expectations beat forecasts of remaining at 100.1 by printing a solid 104.5 in IFO’s report. IFO President Clemens Fuest stated on the report;
‘Companies are clearly more optimistic about the months ahead. They are also more satisfied with their current business situation. The German economy is expecting a golden Autumn.
In manufacturing the business climate index rose. This was primarily due to a far more positive outlook for the months ahead.’
The Euro also continued to benefit slightly from weakness in the US Dollar, as markets became increasingly jittery on the ‘Greenback’ ahead of Monday’s US Presidential debate.
GBP EUR Exchange Rate Forecast: Sterling Support Unlikely Until Wednesday
The Euro could see yet another opportunity to advance on Tuesday if Germany’s August retail sales figures beat expectations, as Britain’s economic calendar will be relatively quiet until later in the week.
Wednesday’s UK house prices report from Nationwide might offer Sterling a little support if they beat expectations. However failing that, the Euro could continue to take point in GBP EUR movement due to GfK’s survey for German consumer confidence going into October.
Thursday will be considerably more vital for both the Pound and Euro, as the day’s UK data includes August consumer credit and mortgage approvals. The Eurozone will see a slew of key publications, including German unemployment and preliminary Consumer Price Index (CPI) figures for September.
For the time being Sterling could continue to trend limply amid concerns of a ‘Hard Brexit’. However, as is often the case with Brexit-inspired selloffs, just a small amount of positive data or news may be enough to drive the Pound into a recovery rally as investors purchase Sterling from its cheapest levels.
As a result, better-than-expected data could be the best opportunity to buy the GBP EUR exchange rate from its lows.
