Euro (EUR) Exchange Rates Tick Lower on Disappointing German Data
The Pound Sterling to Euro (GBP/EUR) exchange rate edged fractionally higher by around 0.2% on Friday morning.
The Euro softened versus a number of its major peers after the preliminary results from German Services and Composite PMIs unexpectedly declined in April. However, the Euro downtrend has been minimal thanks to German Manufacturing output which registered better-than-forecast growth in April.
Markit economist Oliver Kolodseike said of the report; ‘The German private sector economy is continuing its unspectacular expansionary trend at the beginning of the second quarter. Although growth remained uninspiring and the headline PMI dropped to a nine-month low, the index was down only fractionally since March and is still indicative of modest growth.’
Meanwhile, the UK unit continues to firm versus its currency peers as ‘Brexit’ jitters ease in line with the latest opinion polls which give the ‘Remain’ campaign a healthy lead.
Yesterday…
Pound Holds Fails to Hold 1.27, Prepares to Close Session Unchanged
The Pound briefly rallied to a high of 1.2731 against the Euro but fell back to trading in the region of 1.2680 (practically unchanged from the day’s opening levels) as the European session drew to a close.
With UK sentiment supported by enthusiasm for the Queen’s 90th birthday, the Pound was able to defy Thursday’s disappointing releases.
However, given that the UK isn’t due to publish any data tomorrow, GBP/EUR could slip before the weekend if Eurozone ecostats impress.
UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate ticked higher by around 0.3% on Thursday afternoon.
Despite the fact that British economic data produced poor results and the European Central bank (ECB) held rates, the GBP/EUR exchange rate continues to trend at an April high. This is likely to be the result of easing ‘Brexit’ concerns as opinion polls suggest the ‘remain’ campaign is gathering momentum.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2720.
Earlier…
- GBP exchange rates slide following poor domestic data
- EUR cools ahead of European Central Bank (ECB) rate decision
- Pound Sterling forecast to hold losses on damp sentiment
- ECB President Mario Draghi forecast to deliver dovish press conference
Pound Sterling (GBP) Exchange Rates Forecast to Soften after Chancellor Osborne Misses Borrowing Targets
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range on Thursday morning.
After domestic data produced particularly disappointing results, the British Pound softened versus its major peers. Government borrowing data showed that Chancellor George Osborne borrowed £74 billion for the 2015/16 financial year. This exceeded Osborne’s target of £72.2 billion by £1.8 billion.
Also damaging to demand for the UK unit was slower-than-expected retail sales growth. March’s Retail Sales missed the median market forecast 3.8% growth on the year, with the result actually only showing 1.8% growth. On the month, March’s Retail Sales contracted by -1.6% which was a much larger contraction than the market consensus of -0.3%.
In response to the retail sales figures, Dennis de Jong, managing director at professional trading platform UFX.com, said: ‘Any number of factors could be to blame, from bad weather to poor employment figures, along with the reality that wage growth remains stagnant. Consumers may also be nervous about an uncertain Brexit outcome, ensuring they keep a tight hold on their wallets. Mark Carney and his BoE colleagues will be hopeful that the pending arrival of summer will prompt the masses to hit the high street, and drive those numbers back up.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2692.
Euro (EUR) Exchange Rate Forecast to Hold Steady ahead of Draghi Speech
Most analysts do not expect European Central Bank policymakers to alter outlook at this time. This is because the ECB introduced significant accommodative measures in the last meeting and policymakers will want to give said measures time to have an impact.
However, the accompanying press conference is expected to cause marked EUR volatility. Many economists predict that ECB President Mario Draghi will reiterate his stance that the bank is willing to introduce further stimulus measures should it prove necessary.
Markus Huber of City of London Markets reinforced this notion, stating; ‘Early afternoon all eyes will be on the ECB meeting, although nobody is expecting any changes in regard to rates or further economic stimulus mainly because not enough time has passed to be able to properly assess if previously implemented measures are working. The meeting itself is still likely to overshadow US corporate earnings releases ahead of the US open.’
EU referendum uncertainty is also likely to begin to adversely impact on demand for the shared currency. Thus far, ‘Brexit’ jitters have only been priced into the Pound, but a UK exit from the European Union would have a massive impact on the Euro as well.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.2660 during Thursday’s European session.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Strengthen
Despite the fact that British data produced weak results, the high likelihood that Draghi will deliver a dovish speech should cause the Pound Sterling to Euro (GBP/EUR) exchange rate to strengthen.
With that said, however, Draghi’s comments may not be hugely impactful given that many traders have priced-in expectations of dovishness.
US ecostats may provoke volatility thanks to EUR/USD negative correlation.
Any political developments regarding the EU referendum will impact on the British Pound, although traders seem reluctant to fully price-in ‘Brexit’ concerns too early.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.2712 during Thursday’s European session.
