Pound to Euro Exchange Rate Firms Following Days of Weak Performance
The Pound (GBP) was one of the market’s weakest major currencies through the past few sessions, keeping the Pound Sterling to Euro (GBP/EUR) exchange rate near its lows as it shed last week’s gains.
Following last week’s jump on UK politics from 1.1878 to 1.1989, GBP/EUR has quickly lost all those gains this week so far.
After shedding around two cents on Tuesday, GBP/EUR touched on a fortnight low of 1.1746 yesterday. The Pound’s appeal remains fairly weak today, but GBP/EUR has bounced back slightly from its worst levels and the pair currently trends near 1.1783.
The Pound outlook has been throttled by returning hard Brexit fears this week. Upcoming Bank of England (BoE) news could influence the outlook as well. Meanwhile, the Euro (EUR) outlook is influenced by rival strength and Eurozone data.
Pound (GBP) Exchange Rates Firm Ahead of Bank of England (BoE)
On Tuesday, the Pound plummeted as investors reacted to news that UK Prime Minister Boris Johnson was planning to outlaw the extension of the Brexit transition period.
With the transition period expected to end just a year from now, this has caused fears to surge that the government will not have the time it needs to negotiate a comprehensive UK-EU deal.
Sterling has remained weak until this morning. This morning’s gains were modest at best though, with the currency simply bouncing back slightly from its worst levels in anticipation of the Bank of England’s (BoE) December policy decision later.
Euro (EUR) Exchange Rates Steady Following Yesterday’s German Confidence Stats
While the Pound’s Thursday morning rebound was a little stronger against other major currencies like the US Dollar (USD), the Euro’s movement remained fairly steady so GBP/EUR gains were limited.
Demand for the Euro has been decent this week due to weakness in rivals like the Pound and US Dollar. The US Dollar is the Euro’s biggest rival, so the US Dollar weakening on trade-sentiment and poor US data made the Euro more appealing.
Eurozone data has been fairly mixed this week which has limited the shared currency’s strength. However, some stats have supported the Euro’s appeal.
Yesterday saw the publication of Ifo’s latest German business confidence report, which showed stats beating forecasts in every notable print. It boosted hopes that Germany’s economy was finally showing more signs of recovery after a slow year.
Pound to Euro (GBP/EUR) Exchange Rate Outlook Could be influenced by Bank of England (BoE)
For now, this week’s Brexit news has left the Pound outlook significantly lower amid revived hard Brexit fears.
As well as eagerly anticipating more Brexit developments, Pound investors are also waiting to see the Bank of England’s (BoE) outlook for Britain and the UK economy.
The Bank of England will hold its December policy decision today. The bank is not expected to make any changes to monetary policy, but any shifts in stance or surprising reaction to last week’s UK General Election could prove influential.
If the bank becomes more dovish amid expectations for Brexit uncertainty, the Pound could see further losses.
While the BoE decision could be highly influential for Sterling, Euro movement will remain focused on strength of rivals like the Pound and US Dollar.
The Pound to Euro (GBP/EUR) exchange rate could also be influenced by tomorrow’s German and Eurozone confidence stats, as well as tomorrow’s UK growth figures.