- Pound Euro Exchange Rate Dips to 1.17 – But may recover from these lows in coming days
- New Brexit Concerns Weigh – Ongoing uncertainty over how the Brexit process will unfold
- EUR Update: Eurozone CPI Meets Expectations – As well as German unemployment results
- Forecast: Manufacturing PMIs on Thursday – From the Eurozone and UK
Pound Euro Exchange Rate sees Wide Wednesday Fluctuations
While Sterling initially appeared to be cooling in Wednesday trade, the British currency eventually fluctuated within a wide region. This took the Pound Euro exchange rate to a new weekly low and a new weekly high.
The day’s Eurozone ecostats were solid, meeting expectations. German unemployment came in at 6.0% in November as forecast, while Eurozone Consumer Price Index (CPI) estimates edged up to 0.6% year-on-year as projected.
Despite this, Sterling continued to benefit from cut short positions on GBP throughout the market, as well as Eurozone political and economic concerns weighing on EUR demand.
(Previously updated 16:52 GMT 30/11/2016)
Pound Euro Exchange Rate Recovers on Tuesday
After plummeting on Monday due to fresh Brexit fears, the Pound Euro exchange rate unexpectedly recovered on Tuesday.
This was largely due to weakness in the Euro, as Eurozone traders became jittery ahead of Sunday’s Italian referendum and Austrian presidential election re-run.
The European Central Bank (ECB) will also hold its December meeting next week, which is likely to set the tone for Euro trade in both the short and mid-term.
These factors all weighed on Euro demand throughout Tuesday, while Sterling benefitted from the day’s surprisingly strong UK ecostats. October consumer credit improved to 1.62b while mortgage approvals increased to 67.52k.
(Published 07:00 GMT 29/11/2016)
The Pound Euro exchange rate plunged on Monday as the Pound lost last week’s bullishness, partially due to profit-taking but also refreshed Brexit concerns. The Euro, on the other hand, was bought up from its lows.
GBP EUR successfully climbed from 1.16 to 1.17 last week and, despite the occasional slip below, was able to hold above those closing highs on Monday despite. At Monday’s worst levels, GBP EUR trended over a cent lower on the day.
Pound (GBP) Strength Undermined by Fresh Brexit Concerns
A number of factors contributed to the Pound’s Monday fall, many of which lingered from last week’s GBP uptrend.
Last week saw the Pound surge thanks to hints that the UK government would aim for a transitional Brexit to make the process easier on businesses, as well as news that the UK government planned to pump money into infrastructure and innovation to boost the economy throughout the process.
However, towards the end of the week the British currency was sold from its highs in a bout of profit-taking. GBP EUR fell from its highest levels of over 1.18 but was able to hold most of last week’s gains despite this selloff.
On Monday the Pound’s selloff continued, partially due to this profit-taking movement in the market but also a slew of new Brexit uncertainties that emerged over the weekend.
News sites were hit with headlines that the author of Article 50 itself had stated that there was under a 50% chance that the Brexit process would be smooth and orderly.
Markets also grew concerned about further complications in the withdrawal after a legal challenge was made to the UK government.
British Influence (a pro-EU think-tank) and its lawyers will argue that activating Article 50 does not facilitate a withdrawal from the European Union’s single market, which is part of the UK’s European Economic Area (EEA) membership.
This has caused a surge of concern that there are more facets to withdrawal even after Article 50 is activated, such as the activation of “Article 127” of the EEA to formally withdraw from the single market.
Euro (EUR) Continues to be Bought from Lows on Weak Rivals
Investors continued to buy the Euro up from its recent lows on Monday, while Sterling’s weakness allowed the Euro to sustain further gains.
Investors have been wary to buy into the Euro since Donald Trump was named US President-elect in early-November, largely due to fears of worsening US-EU trade and concerns that populist politics like protectionism would rise in the Eurozone as they had done in the UK and US.
The Euro’s movement has also been jittery amid speculation that the European Central Bank (ECB) will be extending its stimulus measures in its December 8th meeting.
ECB President Mario Draghi spoke at the European Parliament in Brussels on Monday, but said nothing that concerned traders.
Draghi instead spoke very carefully, stating once more that Eurozone leaders needed to help their nations with fiscal policy on top of the ECB’s monetary policy. He also reasserted once more that the future of Eurozone monetary policy would be decided in December’s meeting.
Pound Euro Exchange Rate Forecast: Eurozone Ecostats in Focus Today
While underlying economic and political factors dominated GBP EUR trade on Monday, the Pound Euro exchange rate could see more data-influenced movement on Tuesday as various key Eurozone ecostats will be published.
France’s 2nd preliminary Q3 Gross Domestic Product (GDP) results will be published soon after markets open and are expected to match the first preliminary set of 1.1% year-on-year and 0.2% quarter-on-quarter.
In the early afternoon, Germany’s preliminary November Consumer Price Index (CPI) results will be published and are expected to hold at 0.8% year-on-year but slip from 0.2% to 0.1% month-on-month.
If these results come in below expectations, the Euro will likely feel additional pressure and this could even cause the shared currency to remain more bearish than the Pound’s current trend as investor concerns about the European Central Bank’s (ECB) extended stimulus measures will worsen.
Tuesday morning will also see the publication of the UK’s October mortgage approvals results, but these are unlikely to significantly influence Sterling trade as ongoing Brexit uncertainty will surely take focus.
The Pound Euro exchange rate is likely to see a gradual downward trend this week, especially if the week’s Eurozone stats impress traders.
