Surprise Eurozone Trade Surplus Reduction Worsens EUR/GBP Trading Today
The Euro (EUR) has made a marginal loss against the Pound (GBP) today, trading at a level of £0.8828.
At a time of high uncertainty for Euro traders, this EUR/GBP exchange rate has been near the lowest level in two weeks due to Eurozone data and concerns about the US.
In the former case, the latest Eurozone trade balance reading has shown a reduction during May, when an expansion had been forecast.
The result hasn’t triggered a EUR/GBP crash, but has still unsettled Euro traders.
Beyond this news, the Euro to Pound Sterling exchange rate has also been weakened by last week’s European visit from US President Donald Trump.
Mr Trump attacked NATO members for not meeting the 2% of GDP recommended payment target, later demanding that this should be raised to 4%.
Although the NATO summit appeared to end on an amicable note, it later emerged that Mr Trump had suggested that UK Prime Minister Theresa May sue the EU.
Last week left the impression that US-EU relations remain on very thin ice, which has negative implications for the Eurozone and has devalued the Euro today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Steady on Signs of Brexit Rebellion
The Pound (GBP) has made a minimal advance against the Euro (EUR) today, but has been held back from an outright rally by Brexit issues.
The latest GBP-weakening news has been that that there could be a Conservative Party rebellion against Theresa May, over the type of Brexit that is being aimed for.
Pro-Brexit MPs have taken issue with the slant towards ‘soft-Brexit’, which would be less economically turbulent at the cost of keeping the UK tied to parts of the EU.
Claiming that this is not what was voted for, hardline Brexiters may try to oust the PM – the prospect of this has limited GBP demand today.
Euro to Pound Exchange Rate Forecast: Is EUR/GBP Volatility ahead on UK Jobs Market Data?
Looking ahead, the next major data which could affect the Euro to Pound (EUR/GBP) exchange rate will come from the UK, in the form of jobs market data on Tuesday.
The morning’s figures will include a measure of jobless claimants in June, April’s employment change reading and May’s unemployment and earnings figures.
Taking these in order, more people were expected to be claiming unemployment benefits in June, whereas May saw a reduction in the claimant count.
Slightly more supportively, April’s employment change reading is tipped to show that 150k-160k people found employment during the month, up from 146k in March.
May’s unemployment rate isn’t expected to change from 4.2%, which is different to last week’s estimates for a rise to 4.3%.
With the earnings data, a forecast-matching wage growth slowdown without bonuses may be countered by faster wage growth with bonuses included.
Overall, the Pound could decline against the Euro if Tuesday’s data disappoints; this could reduce the likelihood of a near-term Bank of England (BoE) interest rate hike.
Among other factors, the BoE relies on UK economic stability as a sign that households could withstand higher interest rates.
If unemployment rises, wage growth slows and fewer people found employment than estimated, then BoE policymakers might reconsider an interest rate hike.
