Update: GBP/EUR Exchange Rate Fails to Recoup Losses Despite Eurozone Retail Sales Slump
The Pound Sterling to Euro (GBP/EUR) exchange rate held losses during the European session despite Eurozone retail sales falling dramatically in October.
Sales slumped -1.1% on the month rather than the -0.7% forecast. This took annual retail sales down from 4.0% to 0.4%.
Pantheon Macroeconomics economist Claus Vistesen said of the results; “October was a month to forget for retailers in the Eurozone. Sales were hit by weakness across the board but a 3.1% month-to-month plunge in spending on textiles and clothing stands out as the main dark spot.
“Overall, spending on non-food- including online trade – fell 1.1%, and the headline was further depressed by a 1.3% and 0.1% decline on food and automotive fuel respectively.”
Update: UK Services Shocker Keeps the Pressure on Pound Sterling Exchange Rates
The Pound extended losses against both the Euro and US Dollar on Tuesday as the UK’s services PMI came in well below the expected reading of 55.
The gauge of service sector output spiralled to 53.8 in November, taking the composite PMI from 55.4 to 54.7.
The interbank GBP/EUR exchange rate hit a low of €1.12 while GBP/USD drifted to $1.33.
Pound Sterling Exchange Rates Give Back Gains as Irish Border Concerns Lead to No Brexit Deal
Pound Sterling (GBP) exchange rates raced ahead yesterday morning in response to rumours that UK Prime Minister Theresa May had managed to secure a Brexit divorce deal.
However, the British currency gave back its gains by the end of the day as it became apparent that the draft document featured plans to avoid a hard border between Northern Ireland and the Republic of Ireland by allowing Northern Ireland to remain in the EU’s customs union and single market.
This provoked an angry response from May’s allies, the Northern Irish DUP party, who demand equal treatment with the rest of the UK.
Sterling slipped following the news that no deal had been agreed, however, European Commissioner Jean-Claude Juncker insisted the meeting had not been a failure, and suggested that the EU was likely to reach an accord with the UK by the end of the week.
Pound Sterling Live Headlines
Pound Sterling softens on no Brexit deal – Irish border issue needs resolving.
GBP/EUR exchange rate slips from one-month high – Traders hold out hope for Brexit deal.
GBP/USD exchange rate flat – Trump Russia scandal mars tax reform progress.
UK service sector PMI on tap – New Zealand dairy auction results due.
Pound to Euro (GBP/EUR) Exchange Rate Drops from 1-Month High on Prolonged Brexit Talks
The Pound to Euro (GBP/EUR) exchange rate struck a one-month high yesterday when it seemed likely that UK PM Theresa May was going to agree a Brexit divorce bill with the EU. However, Irish border concerns got in the way and GBP/EUR dipped later on in the day.
Going forward it will be interesting to see how quickly officials from Britain and the EU can come to an agreement.
Although Monday was touted as a deadline, it appears that European officials are happy that some progress has been made, and are therefore willing to give Britain a little more time to resolve the Irish border situation.
So long as investors retain faith that a deal can be reached over the next few days, we could see GBP/EUR remain close to one-month highs.
However, any suggestion that the impasse has become insurmountable could lead to serious losses for Sterling versus the single currency.
Pound to US Dollar (GBP/USD) Exchange Rate Flat as Trump-Russia Scandal Mars Tax Reform Progress
The Pound gave back gains of around 60 pips versus the US Dollar yesterday as Irish border issues got in the way of progress in the Brexit divorce talks.
USD meanwhile, traded with a neutral bias. Dollar-positive news that the Senate had finally passed a bill that should speed up the implementation of US President Donald Trump’s tax reform was met with a Dollar-negative story implicating the President in a scandal involving the FBI and Russia.
So, while the growth-boosting tax cut is liable to warrant further monetary tightening from the Federal Reserve over the next few years, traders were put off investing in the US Dollar due to concerns that Trump could be adjudged to have obstructed the course of justice, which could potentially lead to impeachment.
Further political uncertainty would likely lead to a depreciation in the US Dollar.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Flat Ahead of UK Service Sector PMI
The Pound to Canadian Dollar (GBP/CAD) exchange rate rose then fell during yesterday’s session in tandem with Brexit sentiment, and it is likely that sentiment surrounding Britain’s negotiations could continue to impact GBP/CAD through today’s session.
Yesterday also saw UK construction print at 53.1, which beat the consensus of 51.0. If today’s service sector print also comes in above target we could see markets drive Sterling higher, but Brexit sentiment will ultimately have the final say over GBP/CAD’s day.
17-Month High Pound to Australian Dollar (GBP/AUD) Exchange Rate in Sight
Sterling hovered close to 17-month highs versus the Australian Dollar yesterday, even as Irish border issues prevented the UK from clinching a Brexit divorce deal.
With officials confident that the talks are likely to progress onto future trade over the next few weeks, it is entirely likely that GBP/AUD could still rally towards levels not seen since the Brexit vote before the year is out.
Dairy Auction Could Influence Pound to New Zealand Dollar (GBP/NZD) Exchange Rate
Movement in the Pound to New Zealand Dollar (GBP/NZD) exchange rate could be influenced by today’s New Zealand dairy auction.
Dairy is the Antipodean nation’s most-lucrative export, meaning any price rises could bolster demand for the ‘Kiwi’, while any drops could weaken the New Zealand Dollar.
Data Affecting Today’s GBP Forecast
09:30 GBP Markit/CIPS UK Services PMI (NOV)
10:00 EUR Eurozone Retail Sales (YoY) (OCT)
15:00 USD ISM Non-Manufacturing/Services Composite (NOV)
NZD Dairy Auction Whole Milk Powder MT (DEC 05)