- Euro Pound 2016 Exchange Rate Below 0.87 – But Euro rebounds from lowest levels
- Hopes of Trump Trade Deal Light Fire Under GBP – Some analysts perceive over-optimism
- Eurozone Growth Stats Disappoint – Populism threat weighs Euro down
- GBP Forecast: Will Trump Bullishness Last? – Trump statements could change market stances
Euro Pound 2016 Exchange Rate Shoots for Recovery on Tuesday
After performing poorly for most of last week and Monday, the Euro Pound 2016 exchange rate successfully sustained a meaningful recovery throughout Tuesday’s European session.
This was largely due to the Pound’s weakness throughout the day, as headlines of a leaked UK government cabinet memo sparked concerns that the government still did not have a concrete Brexit plan.
The day’s Eurozone data provided the Euro with some support, but much of the day’s bullishness was a rebound from the shared currency’s recent lows.
Germany’s preliminary Q3 Gross Domestic Product (GDP) figures disappointed, slowing further than expected in its quarterly print to 0.2%. However, Italy’s Q3 results indicated better-than-expected growth which helped the overall Eurozone score to come in at 1.6% year-on-year as expected.
(Previously updated 12:37 GMT 15/11/2016)
The Euro Pound 2016 exchange rate surged on Tuesday as a number of factors weighed on Sterling demand while Euro investors rebounded from the shared currency’s recent lows.
The Euro had fallen since last week’s Trump victory due to economic speculation bolstering the US Dollar and populism speculation hurting the Euro.
However on Tuesday the single currency saw its best trade day in a while due to corrective trading and hopes that the global market’s current government bond selloffs would benefit Eurozone banks.
Sterling, on the other hand, was weighed down by underwhelming October inflation stats as well as renewed Brexit concerns.
(Previously updated 16:26 GMT 14/11/2016)
Euro Pound 2016 Exchange Rate Trends Narrowly on Monday
Towards the end of Monday’s European session, Sterling’s bullishness faded further leaving the Euro Pound 2016 exchange rate trending in a tighter range around 0.86 EUR GBP.
Hopes towards the prospect of a Trump administration UK-US trade deal remained high and short positions on the Pound meant the British currency still had an upside outlook.
EUR GBP is forecast to continue falling steadily over the coming days due to populism concerns weighing on demand for the Euro, but Sterling is unlikely to resume the kinds of bullish rallies seen last week.
Tuesday’s European session will see key data published, including Italy and Germany’s Q3 Gross Domestic Product (GDP) scores.
(Previously updated 12:50 GMT 14/11/2016)
The Euro Pound 2016 exchange rate slowed its bearishness in Monday morning trade, trending relatively flatly below the week’s opening levels of 0.86.
EUR GBP remains near its lowest levels since September as the Euro has been unable to recover from the weakness seen towards the end of last week. Fears of rising populism continue to weigh down on the single currency as traders turn their attention to an Italian constitutional referendum set to be held in early December.
However, the Pound’s bullishness from last week had run dry by Monday. Traders perceived the British currency as having been overbought.
(Published 07:00 GMT 14/11/2016)
The Euro Pound 2016 exchange rate defied market expectations by plummeting last week, as the fear of spreading populism and hopes of a UK-US trade deal under the US Trump administration allowed Sterling to take advantage of a weak Euro.
EUR GBP lost almost three cents in value last week, beginning the week at around 0.89 and ending the week just above the level of 0.86. The pair trended at its lowest levels since before the Sterling ‘flash crash’ in late September.
Euro (EUR) Undermined by Fears of Surging Populism
Analysts initially predicted that the threat of a protectionist anti-trade Trump being elected as the next US President would damage US Dollar exchange rates, allowing the negatively correlated Euro to strengthen.
However, last week’s market movements came as a surprise to many economists, with traders generally much more bullish on Trump’s surprise 2016 election win than expected.
This meant the Euro was weaker later in the week, as USD investors quickly reversed any ‘Greenback’ bearishness and poured into the US currency instead.
Towards the end of the week, other concerns began to weigh on Euro investors and the value of the shared currency; chiefly, the potential rise of populism within the Eurozone bloc.
With 2016 seeing both the Brexit vote and the Trump vote on the backs of nationalist populism, some analysts began to suggest that the political phenomenon would rise in other developed nations too, such as those throughout the Eurozone.
The possibility of a Eurozone country leaving the bloc and abandoning the shared currency has long been speculated as the biggest threat to the Euro project. Bilal Hafeez, FX strategist from Nomura stated the following, which added to the weight of concern on Euro trade;
“We think given the election calendar for Europe over the next three to six months is liable to have its own upset for non-establishment parties or policies coming in to play’
Pound (GBP) Demand Solid on Hopes for Post-Brexit UK-US Trade Deals
The Euro wasn’t the only currency last week to have an unexpected positive reaction to Trump’s election as the next US President.
Pound Sterling saw one of its best trade weeks in months in response to hints from Trump and his team that Britain and British trade was a very high priority for the Trump administration.
In the days following his successful election, Trump conversed with UK Prime Minister Theresa May, calling Britain a close ‘friend’ of the US and indicating a strong willingness to work together.
This has left traders hoping that some kind of stronger tie between UK and US trade was high on the priority list of the upcoming Trump administration, which left markets bullish on Sterling towards the end of the week.
Investors have also been readjusting on Sterling amid the possibility that the UK’s economic protectionism following the Brexit vote would no longer be an outlier as populism spreads.
Euro Pound 2016 Forecast: How Much Sway does Trump Hold over EUR GBP Exchange Rates?
It’s almost a week since the US election and the result that shook markets and Trump’s victory has had a direct effect on Euro Pound 2016 exchange rates for most of that time.
Many expect investors will eventually cool on the news and settle on the reality of President-elect Trump, but the dark cloud hanging over the heads of foreign exchange markets is Trump’s stance on trade and that’s one he has been vague over since his election.
Last week’s movement operated under speculation from analysts that President Trump would be more pragmatic and ‘pro-trade’ than the anti-trade Trump seen on the campaign trail.
As a result, the US Dollar would plummet and potentially allow the Euro to recover against the Pound in the coming weeks if Trump reasserts any of his more controversial protectionist proposals.
Analysts are also sceptical over the possibility that traders have lightened up on the UK’s Brexit-filled future – instead suggesting that last week’s movement was simply due to a shift in priority and focus while global markets focused on the US election.
As such, calmer markets could react to some of the coming week’s Eurozone and UK datasets which include Q3 German and Italian growth figures as well as October’s UK inflation stats on Tuesday.
However it certainly seems like politics will play an increased role in Euro Pound 2016 exchange rates for foreseeable future, with Brexit, Trump and the rising concern of Eurozone populism posing a rising challenge for market stability.
