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European Populism Fears Improve GBP EUR Exchange Rate

Euro Currency Forecast

An unexpected -1.9% fall in UK Retail Sales in December brought an early end to the Pound’s advance against the Euro on Friday morning as rising inflation caused consumer spending to plummet.  The data left the GBP EUR exchange rate trending in the region of 1.1560. (Updated 10.30 GMT 20.01.17)

The GBP EUR exchange rate has steadily risen today as growing support for populist parties in Europe weighs on the Euro.

Uptick in Pound Euro (GBP EUR) as Populist Fears Grow

The Pound saw a steady improvement this morning as the Euro was weakened by concerns that the Eurozone may be disrupted by the rise of European populist parties ahead of a number of key elections.

With both the Netherlands’s Geert Wilders and France’s Le Pen performing strongly in recent polls, a Brexit-like upheaval taking place cannot be ruled out.

Pound Rises as Barclays Chief Dispels ‘Brexit’ Concerns

Sterling sentiment was also improved today by comments from Barclays chief executive Jes Staley who said that London will remain the ‘financial lungs of Europe’.

While he confessed that some parts of its banking operation would have to move to the Eurozone, he was confident that much of its European banking could remain in the UK after ‘Brexit’.

The news was welcomed by investors who feared that large parts of London financial sector could flee to the continent once the UK leaves the EU, especially after HSBC announced that it may move 20% of its business and hundreds of staff to Paris in reaction to ‘Brexit’.

GBP EUR Exchange Rate Forecast: ECB Meeting Ahead

While the European Central Bank (ECB) will meet later today for its first policy meeting of 2017, the GBP EUR exchange rate is likely to remain largely unchanged as the Bank is expected to vote to hold interest rates at record lows.

However there could be some movement if ECB President Mario Draghi hints that the Bank will begin tapering its bond-buying programme following the recent improvement in Eurozone inflation.

Meanwhile,  the Pound may extend its gains on Friday as the UK’s latest Retail Sales figures are expected to have risen from 6.6% to 7.6% in December as consumers rushed to make their purchase before expected price hikes at the end of January.

Current Interbank Exchange Rates

At the time of writing the GBP EUR exchange rate was trending around 1.15 and the EUR GBP exchange rate was trending around 0.86.