- Sterling remains on top against Euro ahead of Fed news – Shortage of major ‘Brexit’ news aids Pound’s appeal
- Euro remains unsettled as Fed interest rate decision looms – Single currency remains vulnerable to market shocks
- Fed speech after announcement may bolster Euro – Odds of Fed activity remain slim
- ECB’s Constancio due to Speak – Central bank official to talk on macroeconomics
The appeal of the Pound has been relatively consistent at a high level today, thanks in part to no notable EU Referendum news emerging to harm Sterling’s chances.
Another source of support for the Pound against the Euro has been the Federal Reserve’s incoming interest rate decision; at the time of writing, it remained to be seen whether the central bank would do the improbable and raise the national interest rate by any great amount.
With this in mind, the evening’s Fed speech is likely to hold the greatest sway over the GBP/EUR pairing in the near-term, with unlikely hawkish comments more likely to limit the Euro’s appeal than dovish ones.
Also due out in the near-future, ahead of the Fed news, will be a keynote speech from European Central Bank (ECB) official Vitor Constancio, who is expected to speak in the Dutch city of Utrecht.
(Previously updated 09:10 15/06/2016)
The Pound has been generally positive against its competitors today, with losses being few and far between.
The Euro has been a less desirable option for investors, having made a number of losses due to worrying comments from the European Central Bank’s (ECB) Yves Mersch.
UK Economic News: Trio of Supportive Releases Elevate Sterling’s Status
As with the previous week, the Pound has been a strong option for investors today, with gains being recorded against a majority of competitors. Among these advantageous movements have been gains of 0.5% against the Euro (GBP/EUR), 0.6% against the US Dollar (GBP/USD) and 0.8% against the Swiss Franc (GBP/CHF).
The main source of this support has been the UK’s domestic data; claims fell in May as did unemployment in April, while average earnings excluding bonuses rose in April as well.
The ‘Remain’ campaign has also been doing its best to counter the apparent strength of the ‘Leave’ side, with Chancellor George Osborne recently warning that budget cuts would likely be guaranteed in the event of a ‘Brexit’.
Earlier on in the week, the Pound had been pushed in uncertain directions by domestic data; Sterling was faring poorly on concerning EU Referendum polls before the flat inflation rate results for May elevated the currency’s status, potentially on account of the fact that a drop was not recorded.
Euro Dips against Competitors as ECB Official Highlights need for Banking Reform
The single currency has dropped slightly against a number of peers recently, recording losses of -0.2% against the South African Rand (EUR/ZAR), -0.4% against the Australian Dollar (EUR/AUD) and -0.5% against the New Zealand Dollar (EUR/NZD). Against the Pound (EUR/GBP), the Euro has fallen by -0.6%.
The latest Eurozone news has been mainly positive, with earlier French inflation rate results for May improving on their previous printings.
In a less supportive development, the single currency’s growth has been held back by a late speech given yesterday, which came from the ECB’s Yves Mersch.
Speaking on the ‘new normal’ faced by the banking industry, Mersch warned that:
‘We need both change and stability to secure the future of Europe’s banking sector. On the one hand, we should support the healthy forces of creative destruction resulting from competition and technological advances. On the other hand, we need certainty and stability so that banks can make long-term business plans and do their job of financing productive investment’.
Future GBP, EUR Forecast: Eurozone Trade Data and Further Central Bank Speeches on the Way
The rest of the day for the GBP/EUR pairing is likely to be driven mainly by movement from the latter half, given that the bulk of the day’s UK data has now come and gone.
This will consist of further trade balance contributions, from Ireland in the morning and Belgium in the afternoon.
The only other expected announcements for the afternoon will come from Bundesbank and the ECB; in the former case, Jens Weidmann is expected to make some comments, while in the latter, the ECB’s Vitor Constancio is scheduled to make a delivery.
Current GBP, EUR Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2654 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7904 today.
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