- EUR GBP turns positive on UK economic uncertainty – EUR GBP rate at 0.89
- Pound dented by ‘Hard Brexit’ risks – Warnings of trading holdup at UK ports
- Eurozone construction stats out shortly – Key UK earnings data incoming
The Euro has managed to restore its gains against the Pound today, though mainly on account of Sterling dropping off due to negative UK news. From the Eurozone, the day’s pessimistically-predicted August annual construction output has yet to arrive, though the Euro has been trading well overall regardless.
The latest damage to the Pound has come from the top, as cabinet ministers have been issuing warnings that a -4.5% drop in UK GDP could come if a ‘Hard Brexit’ is enacted. For context, compared to a ‘Soft Brexit’, the ‘Hard’ variant envisions removing the UK from the EU single market, which is predicted to result in a backlog of trade in UK ports, among other negative impacts.
(Last updated October 19th, 2016)
The Euro’s performance against the Pound has worsened significantly today, though primarily because of a political development in the UK.
Specifically, Downing Street sources have confirmed that due to a legal case, the House of Commons likely will get a vote on ‘Brexit’ to officially ratify it. While this news sent the Pound soaring, it has not yet been confirmed what the vote will cover, such as whether a negative decision could stop ‘Brexit’ entirely or just extend the time before Article 50 is triggered next year.
More supportive UK news has concerned potential trade deals with New Zealand, although notably the UK is still legally unable to formally make any agreements until it has left the EU, which is predicted to happen in 2019.
(Last Updated October 18th, 2016)
While the Pound has not been in high demand overall today, it has nonetheless managed to record a number of gains against regular peers, owing to investor reactions to the latest inflation rate results.
Euro News: Limited Eurozone Data Supply Leaves Single Currency Rudderless
Euro exchange rates today have been disappointing overall, with the single currency falling by -0.5% against the Australian Dollar (EUR AUD) and the Pound (EUR GBP) and -0.7% against the South African Rand (EUR ZAR).
The latest domestic data out of the Eurozone has been low-impact, focusing on a slight decline in Slovenia’s unemployment rate for August.
Yesterday actually brought positive news for the single currency, with September’s finalised inflation rate figures rising above forecasts on the month and matching expectations on the year.
Pound Sterling Stable after Earlier Inflation Rate Unrest
The Pound has been trading steadily in a positive position against most of its rivals today, following on from the release of September’s inflation rate results for the UK.
Consumer price growth has risen from 0.6% to 1% on the year, above the 0.8% figure that had been forecast. This initially saw the Pound slump due to investor uncertainty, but since then, the Pound has managed to rise again against most of its regular peers.
While this would usually be good news for the Bank of England (BoE) as it draws closer to meeting its inflation rate target, the BoE has already ruled that it will ‘look through’ increased price pressures from weakened Sterling when adjusting monetary policy. A failure for wage costs to rise in tandem will leave UK citizens more out of pocket when paying for living costs, which will worry markets.
Aegon Investment Director Nick Dixon has been commenting on how inflation could continue to rise, saying;
‘The renewed slide in the Pound following ‘hard Brexit’ noise will flow through to higher inflation, potentially exceeding 3% during 2017’.
Future EUR GBP Forecast: Further Pound Volatility Expected on Wednesday’s Jobs Data
Eurozone data out tomorrow is only set to be slightly less-limited than today’s, with August’s construction output figure on the year set to fall from 3.1% to 1.7% in the morning.
More numerous UK announcements will cover continuing claims made in September, as well as August’s unemployment rate and earnings figures.
The Pound may fluctuate over the course of the morning, given that claims are set to fall, unemployment has a rise in store and earnings are set to rise without bonuses but fall with them.
Current Interbank Exchange Rates
The Euro Pound (EUR GBP) exchange rate was trending in the region of 0.89 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.11 today.
