The Pound rose considerably against the Euro and closed last week in a strong position, but the middle of next week could see these gains quickly reversed.
- GBP EUR rate rose from 1.15 to 1.17 last week – EUR GBP traded between 0.86-0.84
- Pound unsettled by Commons vote on Article 50 bill – UK manufacturing rose above forecasts
- Euro continually weakened by Greek debt crisis – Wide divisions seen between Greece and Germany
- Pound losses predicted if UK jobs stats disappoint – Eurozone GDP and French unemployment stats incoming
The Euro was repeatedly damaged last week by the Greek debt crisis, which could approach a critical moment next week.
Pound Sterling Euro Investors Rattled by Commons Vote on Article 50 Bill Last Week
The start of last week was dominated with Brexit news, as MPs debated and ultimately voted on the Article 50 bill that needs approval before Brexit can properly begin.
While the majority approval that occurred had been forecast beforehand, observers were still left in surprise by a complete lack of amendments to the bill, something that could be repeated in the House of Lords.
With Parliament now in recess, the Lords are due to debate and vote on the bill starting February 20th. In UK data news, manufacturing production rose strongly in December, while monthly industrial production and construction output slowed over the same month. The Pound was able to appreciate heavily against the Euro over the week, closing off trading in a favourable position.
The Euro spent most of last week in a bad state, having been continually devalued by concerns about how the resurgent Greek debt crisis could escalate.
February 20th is the deadline for an agreement to be reached between the Greek government and its creditors, though last week German Finance Minister Wolfgang Schauble aggravated the situation by claiming that Greece could only find debt relief by leaving the Eurozone.
Eurozone news saw the German trade balance for 2016 beat 2015’s figures on Thursday, though French industrial production for December fell into a negative range for December on Friday.
Pound Sterling Weekly Prediction: Inflation Rate Stats could Trigger GBP EUR Slump if Earnings Fall
Tuesday and Wednesday will be the main UK data days this week, bringing inflation rate stats for January and earnings and unemployment figures for December, respectively.
Inflation is due to jump on the year from 1.6% to 1.9%, while earnings are expected to reprint at 2.8% with bonuses and 2.7% without.
It is worth noting that forecasts are not set in stone, however; if inflation rises above predictions and earnings actually slow, the Pound could well drop against the Euro due to rising concerns that UK consumers will face inflationary pressures in 2017.
This theme will be continued on Friday, when UK retail sales for January are due. At present, annual slowdowns are expected, though not to negative ranges.
Euro Investors to Focus on Eurozone GDP, Greek Debt Talks Next Week
The coming week’s big Eurozone news will come on Tuesday and Thursday primarily, when Eurozone GDP stats for Q4 and French unemployment rate figures for the same quarter are due.
Isolating this data, the Euro could rise on the GDP stats, given that rises are forecast on both the quarter and the year.
Of continuous interest however, will be talks for the Greek debt crisis, which could cause the Euro to slide dramatically if it looks like relations are set to disintegrate between Greek officials and its international creditors.
Recent Interbank Exchange Rates
At the time of writing, the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.17 and the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.85 today.
