- Pound Euro Exchange Rate Falls to 1.15 – Briefly dips to 1.14 on Monday
- Brexit to Begin in Early 2017? – Boris Johnson comments ignite Article 50 speculation
- Forecast: UK House Data Decorates the Week – Q2 Growth stats due on Friday
- Forecast: German Data in Focus – Plus Eurozone unemployment and inflation on Friday
Pound Euro Exchange Rate Recovers on Tuesday
The Pound Euro exchange rate spiked up from its worst levels during Tuesday’s European session, rising above the week’s opening levels and even above the key level of 1.16 at the time of writing as investors bought the Pound up from its cheapest levels.
However, amid a lack of positive ecostats or domestic news, Sterling’s advances may be limited and the currency could easily fall from these highs by Wednesday unless supportive data is published.
Sterling was able to capitalise on a weak Euro throughout the day, as Eurozone investors grew increasingly anxious about how a perceived crisis with Germany’s Deutsche Bank could unfold.
Some analysts have suggested its financial difficulties could even damage the Euro itself, which weighed on Euro demand on Tuesday afternoon. The shared currency may be able to recover on Wednesday if GfK’s October German consumer confidence survey beats expectations.
(Previously updated 16:27 BST 26/09/2016)
Pound Euro Exchange Rate Hits New Three-Year-Lows
The Pound Euro exchange rate extended last Friday’s selloff first thing on Monday, taking GBP EUR to lows not seen since August 2013. The pair fluctuated above the level of 1.15 on Monday afternoon, but briefly dipped as low as 1.1476 in the middle of the European session.
Last week’s Brexit concerns continued to weigh on the Pound throughout the day, while the Euro was bolstered by a surprisingly optimistic German business sentiment survey from IFO.
IFO’s report indicated that Germany’s businesses were expecting a ‘golden Autumn’, as business climate improved from 106.2 to 109.5 in September, while the current assessment gained from 112.8 to 114.7 and expectations improved from 100.1 to 104.5.
Later in the day, the market’s Pound selloff cooled as investors became more fixated on Monday’s scheduled US Presidential debate. This also strengthened the Euro slightly, but was unable to keep GBP EUR down at its worst levels.
(Published 06:00 BST 26/09/2016)
The Pound Euro exchange rate plummeted on Friday afternoon as investors continued to sell Sterling following speculation that Article 50 could be activated in early 2017. The Euro was able to hold its ground despite the day’s mixed PMI results.
GBP EUR began last week trending limply around the region of 1.1650 and generally fluctuated close to this level throughout the week, briefly reaching as high as 1.17. Friday’s session led to a sharp drop for Sterling however, causing the pair to hit a monthly-low of 1.1545.
Pound (GBP) Exchange Rates Undermined by Fresh Brexit Anxiety
Despite generally trending limply on a lack of supportive ecostats, Sterling was able to hold its ground against the Euro and some other major currencies last week.
There were also opportunities for Sterling to recover from its falls in the previous week, thanks to hawkish comments made by Bank of England (BoE) policymaker Kristin Forbes on Thursday afternoon.
Forbes stated that she did not yet believe there was a case for further BoE easing measures in the coming months. Sterling experienced a small relief rally as investors bought the currency up from its lows.
However, this strength was short-lived as GBP plummeted on Friday due to comments made by Britain’s foreign secretary, Boris Johnson. MarketWatch reported;
‘Speaking with Sky News in New York late Thursday, Johnson said the UK government is in talks with its European partners in the “expectation that by the early part of next year, you will see an Article 50 letter.”
Triggering Article 50 is the action that officially would kick off the UK’s exit from the European Union.’
With UK markets increasingly concerned that the chances of delaying the Brexit or remaining part of the EU’s single market are increasingly slim, investors sold the Pound en masse.
Euro (EUR) Holds Ground on Strong Manufacturing Scores
The Euro, similarly to the Pound, was able to hold its ground for much of last week despite a lack of key ecostats.
The shared currency was given a stronger foothold later in the week due to the week’s disappointing Federal Reserve news, which saw forex markets selling the US Dollar in favour of rivals such as the Euro.
However, it wasn’t until Friday that the Euro was able to easily capitalise on the Pound’s weakness, and this was bolstered slightly by the day’s preliminary Eurozone PMIs for September.
Markets were cheered as France’s private sector saw a considerable improvement since August. On the other hand, Germany’s Services PMI slowed from 51.7 to a worse-than-expected 50.6. This dragged the Composite PMI score down from 53.3 to 52.7.
Germany’s disappointing Services result was also enough to drag down the overall Eurozone Services and Composite scores, as the currency bloc’s Composite PMI let down expectations of 52.8 by slowing from 52.9 to 52.6.
Manufacturing, on the other hand, impressed across the board. As Manufacturing is Germany’s biggest sector, the German print improving from 53.6 to 54.3 impressed markets and boosted the Eurozone’s manufacturing score from 51.6 to 52.6.
Pound Euro Exchange Rate Forecast: UK House Sales and German Stats Ahead
As with last week, the coming week’s economic calendar will not be hugely influential until the end of the week, when key figures such as Britain’s Q2 GDP and the Eurozone’s latest unemployment and inflation scores will be published.
Until then however, GBP EUR will likely continue to trend on last week’s Brexit news as well as this week’s upcoming UK housing figures and miscellaneous German datasets.
Monday will see the publication of IFO’s September German business sentiment scores, and BBA’s British house loans scores for August. Germany’s August retail sales report will be published on Tuesday.
The Euro is more likely to take point with GBP EUR movement earlier in the week due to the comparatively more influential German datasets.
On the other hand, with markets now focused on Brexit and Article 50 speculation again, any comments from government or banking officials taking a more optimistic look on a post-Brexit Britain may offer the Pound Euro exchange rate some support in the week ahead.
