Pound to Euro Exchange Rate Avoids Further Losses despite Lack of Pound Support
Despite a lack of notable support in the Pound (GBP) this week so far, the Pound Sterling to Euro (GBP/EUR) exchange rate rebounded again this morning and trended closer to the week’s opening levels again. This was due to Euro (EUR) weakness.
Last week saw mixed movement for GBP/EUR, which ultimately led to the pair sliding from 1.1222 to 1.1200 throughout the week. GBP/EUR notably touched a post-January worst level of 1.1149 earlier last week.
This week’s movement has been even narrower, with GBP/EUR fluctuating between highs of 1.1210 and lows of 1.1163 since yesterday due to a lack of particular strength in either currency.
The Pound remains weighed by UK political and Brexit jitters, while the Euro is being kept under pressure as the latest Eurozone data does little to dissuade market European Central Bank (ECB) interest rate cut bets.
Pound (GBP) Exchange Rates Rebounds despite Persisting Political Jitters
Investors bought the Pound back slightly from yesterday’s lows this morning, but rather than being due to any notable domestic support it was more because of weakness in rivals and investors reassessing Monday’s slip.
Investors sold the Pound yesterday due to deepening political uncertainties, as headlines were hit with controversies regarding the frontrunner to be the next UK Prime Minister, Boris Johnson.
Following his silence at the beginning of the week, Johnson entered damage control mode today, which has lightened some of this week’s political uncertainty.
However, Sterling’s appeal remained highly limited as Johnson has maintained that he would go through with a no-deal Brexit if he cannot negotiate a deal with the EU.
What’s more, many analysts predict that there is still downside in the Pound’s outlook.
Euro (EUR) Exchange Rates Slide on Eurozone Data and Geopolitical Jitters
While GBP/EUR advanced today, it was just as much due to Euro weakness as it was Pound strength.
The Euro has struggled to hold its best levels against the Pound, as European Central Bank (ECB) easing speculation has risen since last week and the Eurozone’s latest data has not done much to support the shared currency either.
Monday’s German business confidence data from Ifo was mixed, and even though the business climate print beat expectations it still came in with its worst print since 2014.
This morning followed with France’s June business confidence results, which unexpectedly slipped from 104 to 102 rather than remaining at the expected 102.
It reflected a fall in overseas orders in France, and weighed more on concerns that the Eurozone economy was struggling to be resilient amid US trade protectionism.
On top of this, investors sold the Euro in favour of safe haven currencies like the Japanese Yen (JPY) due to rising geopolitical tensions between the US and Iran.
Pound to Euro (GBP/EUR) Exchange Rate Awaits Major Eurozone Data
This week’s Pound to Euro (GBP/EUR) exchange rate movement has been subdued so far, as investors await more influential Eurozone data that could impact European Central Bank (ECB) policy speculation.
German and French consumer confidence data will be published tomorrow, but the biggest focuses for Euro investors this week will be key datasets due for publication on Thursday and Friday.
Eurozone confidence results from June and German inflation will be published on Thursday, followed by French and overall Eurozone inflation stats on Friday.
The inflation results in particular could influence the Euro outlook. If Eurozone inflation beats expectations, it could softer ECB easing speculation and lead to stronger demand for the Euro.
Due to the importance of those figures, the Euro is likely to drive GBP/EUR movement for much of the week.
However, the Pound to Euro (GBP/EUR) exchange rate outlook could also be driven by surprising UK political or Brexit developments.