- Euro Pound Sterling Exchange Rate at 0.83 – Lowest levels since December
- UK Prime Minister Announces General Election – Investors firm on Pound after announcement
- Eurozone Inflation Meets Expectations – Euro sees little change
- GBP Forecast: UK Retail Sales Data on Friday – How are UK consumers handling inflation?
Euro Pound Sterling Exchange Rate Edges Away from Lows
EUR GBP edged higher on Thursday and at various points touched on the key level of 0.84 for the first time since Tuesday’s Pound rally.
This gain was partially due to Pound profit-taking, as well as increased hopes that Emmanuel Macron could win the French Presidential election.
However, since the surprising results of last year’s Brexit vote and US Presidential election, traders are being careful not to become overly optimistic about a race that most analysts are still calling ‘too close to call’.
French Presidential election jitters have limited the Euro’s gains and the shared currency is unlikely to advance much on Friday either, even if the day’s Eurozone PMI results impress traders.
[Previously updated 12:46 BST 20/04/2017]
The Euro Pound Sterling exchange rate edged higher and neared the key level of 0.84 on Thursday morning, as a lack of fresh supportive factors in GBP trade left investors selling the currency from this week’s highs.
Pound sentiment remains strong and EUR GBP is likely to end the week below its opening levels, but Thursday’s session saw the Euro put in a modest recovery.
The Euro’s recovery was boosted by the latest French Presidential election opinion polls. While the race still appears remarkably close, pro-EU candidate Emmanuel Macron appears to have seen a boost in support.
Macron is the foreign exchange market’s favourite to win, due to the expectation that he will keep France a stable member of the Eurozone.
[Previously updated 16:39 BST 19/04/2017]
Euro Pound Sterling Exchange Rate Flat on Wednesday
While the Pound’s strength cooled slightly on Wednesday, the Euro Pound Sterling exchange rate remained near its worst levels since late last year.
A lack of appeal for the Euro allowed Sterling to easily hold most of this week’s gains.
Wednesday’s Eurozone inflation stats had no notable influence on Euro movement. March’s month-on-month inflation stat rose from 0.4% to 0.8% as forecast, while the yearly figure slowed from 2% to 1.5% as projected.
Thursday’s European session will see the publication of the Eurozone’s preliminary April consumer confidence stats, as well as Eurozone construction output from February. Neither are likely to influence a shift in Euro Pound Sterling exchange rate movement.
[Previously updated 12:43 BST 19/04/2017]
Wednesday saw little change in the Euro Pound Sterling exchange rate as the Pound held onto most of its impressive Tuesday gains.
EUR GBP continued to trend in the region of 0.83, relatively flatly near its 2017 lows. While the Pound’s advances slowed, it held its ground indicating that traders were comfortable with its current position.
Meanwhile, the Euro also saw little change in movement. The shared currency has remained pressured by French Presidential election jitters and the latest Eurozone Consumer Price Index (CPI) results largely met expectations.
[Published 06:00 BST 19/04/2017]
The Euro Pound Sterling exchange rate fell when UK markets opened on Tuesday. Political concerns weighed on the Euro and optimism about a suddenly announced UK general election bolstered Pound appetite.
EUR GBP spent most of the long Easter weekend trending at the level of 0.84 after falling from last week’s levels of 0.85. On Tuesday the pair fell into the region of 0.83, its worst levels since December 2016.
Euro (EUR) Held Back as French Election Jitters Worsen
The Euro has been unable to hold its ground against the Pound’s movement since markets opened this week.
Euro traders are becoming increasingly jittery as the 2017 French Presidential election will begin this coming Sunday – and France’s membership in the Eurozone may be on the line.
Far-right anti-EU candidate, Marine Le Pen, remains the favourite to win the first round of the election and far-left anti-EU candidate Jean-Luc Melenchon has quickly gained momentum in recent weeks. Analysts are finding the race increasingly tough to call.
On Tuesday, the head of the International Monetary Fund (IMF) Christine Lagarde stated that the election result could threaten the Euro itself;
‘It is clearly one of the debates. And one that actually weighs on the confidence and the stability of the euro area–because if one of the largest partners is wondering if its destiny and fate is in or out of the group, it is a huge question mark for the others.’
Most opinion polls suggest centrist pro-EU candidate Emmanual Macron will win second place in the first round and beat Le Pen in the second, final round which would pit the two in a one-on-one vote.
However, since last year’s surprising Brexit and Trump votes uncertainty is still high. If anti-EU candidates perform well in the election, ‘Frexit’ may become reality and the Euro’s future as a currency could even be called into question if one of its biggest members leaves.
Pound (GBP) Surges as UK Prime Minister Calls Snap Election
Sterling performed solidly over the Easter Weekend as it benefitted from the Euro’s political jitters – but it surged even higher on Tuesday after UK Prime Minister Theresa May made a highly unexpected announcement.
May announced on Tuesday morning that the UK would hold a snap general election on the 8th of June. May, who was unelected when she succeeded David Cameron as PM last year, looked to secure a majority mandate in Parliament for the Conservative party to minimise the amount of government opposition during her Brexit process.
Due to poor polling data for opponent party Labour, bets of a clean majority win for the Conservative party soared.
This news particularly benefitted the Pound, as investors had been anxious that Theresa May’s government could hit roadbumps during the Brexit process without a stronger mandate in Parliament.
Traders were also anxious about the possibility of a change in government in the middle of the Brexit process, in the chance Brexit negotiations are extended into 2020 or beyond. However, if May wins this election as markets predict she will, her government is set to remain in power until 2022.
Trevor Greetham, head of multi-asset from Royal London Asset Management, commented on Sterling’s Tuesday strength;
‘Sterling has taken the news of a snap general election positively, as while it means increased political uncertainty in the near term, it probably means less uncertainty in the longer term.
If Theresa May gets a significantly increased mandate it will strengthen the UK’s position in Brexit negotiations.’
Euro Pound Sterling Exchange Rate Could be influenced by Eurozone Inflation Data
While the Euro’s movement is likely to be limited by French election jitters all week, the shared currency could find some support on Wednesday depending on the the Eurozone’s final March Consumer Price Index (CPI) results.
Analysts predict that Eurozone inflation will have improved from 0.4% to 0.8% month-on-month in March, but slow from 2% to 1.5% year-on-year.
If inflation beats expectations, it will increase market bets that the European Central Bank (ECB) could be pressured into moving away from its ultra-loose monetary policy sooner than expected.
This would bolster the long-term Euro outlook, but in the short-term the shared currency’s gains will be limited by French election concerns.
The Euro Pound Sterling exchange rate could edge lower throughout the week as these political jitters worsen and the Euro is unlikely to recover unless a pro-EU candidate succeeds into the second round of the French election.
Sterling, on the other hand, is likely to perform strongly for most of the week unless UK Prime Minister Theresa May suddenly sees her polling figures drop.
UK data will be quiet until the end of the week, when Friday’s highly anticipated UK retail sales report for March could influence the Euro Pound Sterling exchange rate.
