Pound to Euro Exchange Rate Slips from Best Levels Again Ahead of Data
The Pound (GBP) was sold from its best levels on Monday, but the Pound Sterling to Euro (GBP/EUR) exchange rate recovered again yesterday thanks to hopes for the upcoming UK budget. Hopes for strong UK data is also keeping the pair supported.
Despite this week’s mixed movement, GBP/EUR has sustained most of last week’s considerable gains. GBP/EUR surged from 1.1778 to 1.2047 last week.
Yesterday afternoon GBP/EUR even touched on a high of 1.2069 – the pair’s best level since the aftermath of the 2016 Brexit referendum. At the time of writing, GBP/EUR has slipped but continues to trend high in the region of 1.2033.
The Pound continues to benefit from the outlook for a strong UK economic rebound this year. It has been easily able to hold against the Euro (EUR) which is being pressured by concerns that the Eurozone economy is in for extended slowdown.
Pound (GBP) Exchange Rates Benefit from UK Budget Anticipation
Last week saw the Pound benefitting significantly from news of a change in UK Chancellor. Sajid Javid resigned and was replaced with Rishi Sunak.
As a loyalist to UK Prime Minister Boris Johnson, analysts predict Sunak could push more expansive government spending that could boost economic activity. This led to a surge in the Pound.
Yesterday, hopes for an economy-positive budget rose further as Sunak confirmed that the annual budget would be held on the 11th of March as previously scheduled, with no delay.
This news kept the Pound strong and made it easier for the British currency to sustain most of its recent gains.
Sterling has also found support in recent UK data. Strong job change stats yesterday made investors more confident in Britain’s economic resilience.
Euro (EUR) Exchange Rates Struggle to Hold Ground as Eurozone Outlook Weak
Investors have had little reason to buy the Euro since last week. Eurozone data continues to disappoint investors, and this as well as strength in the Euro’s rival the US Dollar (USD) has meant Euro weakness.
Yesterday followed last week’s disappointing Eurozone growth stats with some underwhelming economic sentiment data from ZEW.
ZEW’s German and Eurozone figures came in well below expectations in all prints. German sentiment slumped to just 8.7 while the Eurozone sentiment index slowed from 25.6 to 10.4.
The stats worsened concerns that there was likely to be further slowdown ahead in the Eurozone economic outlook. Today’s Eurozone current account data came in with a higher surplus than expected but this did little to boost the Euro.
Pound to Euro (GBP/EUR) Exchange Rate Focused on Major Upcoming Data
The Pound is currently being supported by hopes for a UK budget that could introduce strong government spending and help to boost a domestic economic rebound.
Hopes of a UK economic rebound overshadowing Brexit concerns for the time being. As a result, if upcoming data makes investors even more confident in an economic rebound the Pound may be in for further strength.
Tomorrow will see the publication of retail sales results from January, followed on Friday by this month’s PMI projections.
As always, PMI projections will give investors a better idea of how the economy is performing this month. If the data beats forecasts, the Pound could end the week on a strong note.
Euro investors are also likely to pay close attention to upcoming data. Eurozone confidence data tomorrow and PMI projections on Friday could make investors more hopeful for a Eurozone economic recovery if they impress.
If they disappoint though, the Pound to Euro (GBP/EUR) exchange rate outlook could climb even higher.