Euro to Pound Exchange Rate Seeing Limp Movement amid Lack of Drive
Investors are hesitant to buy the Euro (EUR) too much amid concerns about the Eurozone’s economic outlook, leaving the Euro to Pound Sterling (EUR/GBP) exchange rate’s recovery limp so far this week.
It follows last week’s significant tumble, in which EUR/GBP fell from 0.8491 to 0.8302. EUR/GBP briefly touched on a post-referendum low of 0.8297 at the end of last week – its worst level since 2016.
While investors are selling the Pound (GBP) back from its highs this week though, an improving UK economic outlook and a lack of strong Euro support means that recovery has been limited.
At the time of writing on Tuesday, EUR/GBP was sliding again and trended in the region of 0.8317. For now, investors are highly anticipating major Eurozone and UK data due this week.
Euro (EUR) Exchange Rates Knocked as Eurozone Confidence Stats Show Fresh Concerns
Today has seen the publication of February’s economic sentiment index surveys from ZEW. Unfortunately for the Eurozone outlook, all notable prints came in notably below expectations.
Germany’s current conditions results deepened from -9.5 to -15.7 rather than the expected -10.3, and the economic sentiment figure slumped from 26.7 to just 8.7.
The overall Eurozone figure also slumped, falling from 25.6 to 10.4 rather than climbing to 30.0 as expected.
#Germany: Investor confidence deteriorated markedly in February with the ZEW index dropping to 8.7 from 26.7 in January amid fears over the impact of the #coronavirus on trade. #GreenShootsTurningIntoBrownWeeds? pic.twitter.com/UNUmgUnxkO
— Katharina Utermöhl (@Economist_Kat) February 18, 2020
The poor data left investors even more concerned that the Eurozone economy was not rebounding from its year of slowdown just yet, and that further slowdown may still be ahead.
It followed last Friday’s disappointing Eurozone growth stats, and led to fresh weakness in the Euro today.
Pound (GBP) Exchange Rate Strength Limited on Mixed UK Data and Brexit Outlooks
After slipping from its best levels yesterday in market profit-taking, the Pound saw a steady advance again this morning.
Investors bought the Pound in reaction to the latest UK job market report, which showed a surprisingly high number of new jobs created. The latest employment change data came in at an impressive 180k.
However, the day’s other domestic news wasn’t as supportive. Wages unexpectedly slipped below expectations, and fresh signs of tensions in UK-EU relations kept the pressure on Sterling.
While optimism over Britain’s improving economic outlook has supported the Pound’s recent strength, analysts warn that it remains sensitive to sudden Brexit comments or developments. According to David Madden, Market Analyst at CMC Markets:
‘I think there’s a continued reluctance to be excessively bullish…all you need is a negative comment from an EU official to see a decent pop lower in and for that reason speculators are a bit scared.’
Euro to Pound (EUR/GBP) Exchange Rate Awaits Key UK Data for Pound Outlook
Even when Brexit concerns return, hopes of a strong UK economic outlook are keeping the Pound from falling too much.
As hopes for an economic rebound in the Eurozone are fading again, the Euro also has limited drive to advance.
However, if upcoming Eurozone data impresses investors it could give the Euro a bit more solid support.
Eurozone construction data will be published tomorrow, with German and Eurozone consumer confidence due on Thursday.
Friday will be the biggest session of the week for Eurozone data though. Eurozone PMI projections for February will give investors a much better idea of if the bloc is seeing much of a recovery, or if the slowdown is worsening again.
Strong Eurozone data would make it easier for EUR/GBP to rebound.
Upcoming UK data will be highly influential as well. Key inflation stats come in tomorrow, with retail sales following on Thursday and PMI projections on Friday.
Overall there is plenty of data that could influence the Euro to Pound exchange rate in the coming days.