GBP/EUR Exchange Rate Falls Back as Haskel Comes Across as Dovish
UPDATE 13:18 BST: Further impacting the GBP/EUR exchange rate today was Jonathan Haskel’s appearance in front of MPs earlier today over his appointment to the Bank of England’s Monetary Policy Committee.
This saw Sterling sentiment tick lower as he was perceived as more dovish than his predecessor Ian McCafferty.
Incoming member BoE Haskel leaning on the dovish side …. reminder, he will be replacing one of the most hawkish members McCafferty $GBP
— Justin McQueen (@JMcQueenFX) June 26, 2018
GBP/EUR Exchange Rate Begins Fightback Following Surprise Lift in UK Mortgages
UPDATE Tuesday morning 9:40 BST: The Pound Sterling Euro (GBP/EUR) exchange rate looks to edge higher this morning, recouping some of Monday’s losses as GBP investors welcome an uptick in UK mortgage figures.
UK Finance reports this morning that domestic mortgage approvals rose from 38,300 to 39,200 in May, easily outpacing forecasts that home loans would remain largely unchanged last month and helping to prompt the Pound to accelerate against the Euro this morning.
#UnitedKingdom UK Finance Mortgage Approvals at 39.244T https://t.co/8XGCSFToW1 pic.twitter.com/jsNgvbjlph
— Trading Economics (@tEconomics) June 26, 2018
GBP/EUR Exchange Rate Flat on Fears Harley-Davidson Move Could Escalate Trade Tensions
UPDATE 14:50 BST: The Pound Sterling Euro (GBP/EUR) exchange rate is trading in a narrow range this afternoon with EUR investors skittish following the announcement that Harley-Davidson plans to move a portions of US production overseas due to EU retaliatory trade tariffs.
This will be a major blow for Donald Trump after he singled out Harley-Davidson last year when pushing for more US produced goods to be sold abroad.
On this beautiful Monday morning, #TradeWars remain stupid…
Harley-Davidson motorcycles exported to the EU will cost the company about $2,200 more, as it shifts production overseas to offset EU tariffs https://t.co/qFaPSn5bCK via @WSJ
— Tony Fratto (@TonyFratto) 25 June 2018
Markets worry this could prompt Trump to double down on his plans to impose tariffs on EU car imports, denting the Euro as it causes fears that EU-US trade tensions could continue to escalate.
GBP/EUR Exchange Rate Met by Volatility as Hawkish Shift in BoE Points to August Rate Hike
The Pound Sterling Euro (GBP/EUR) exchange rate traded in a wide range last week, drifting lower on rising Brexit uncertainty in the first half of the week, before rallying following a hawkish turn in the Bank of England (BoE) on Thursday.
The meeting saw a shock decision by the infamously dovish Andy Haldane who voted for an immediate rate hike in June, leading to a spike in Sterling (GBP) as it bolstered hopes that the bank could hike rates when it next meets in August.
However in the face of growing Brexit uncertainty, these gains proved to be short-lived, particularly against the Euro (EUR) which surged higher on Friday as the Eurozone’s latest PMI figures printed higher than expected.
Pound Euro (GBP/EUR) Exchange Rate Muted as Brexit Concerns Hamper Movement
Pound Euro (GBP/EUR) exchange rate is on the back foot again at the start of this week’s session, with Sterling continuing to feel the drag of Brexit.
Two years after the EU referendum markets are bracing for Prime Minister Theresa May to publish the government’s latest outlines for what it plans to pursue with Brexit in a key EU summit taking place later this week.
The main focus for GBP investors is likely to be on May’s proposals for a post-Brexit customs agreement, with her cabinet still appearing split on what this should look like.
Given that there is now less than a year to go before the UK officially leaves the EU, a lack of progress in this week’s summit is likely to place considerable pressure on the GBP exchange rate.
Euro (EUR) Exchange Rates Subdued as German Business Morale Strikes One-Year Low
At the same time the Euro (EUR) is struggling to make any significant headway against the Pound today, in the wake of Germany’s latest business confidence figures.
According to the latest survey, which was published by the IFO institute, Germany’s business climate index tumbled from 102.3 to 101.8 in June.
This appeared to be the latest evidence from Germany that growth in Europe’s largest economy is beginning to slow.
IFO chief Clemens Fuest, said:
‘Companies were less satisfied with their current business situation. Their business expectations, by contrast, remained slightly optimistic.
The tailwind enjoyed by the German economy is calming down.’
GBP/EUR Exchange Rate Forecast: BoE Carney Speech to Move Sterling?
Looking ahead to the rest of this week, Brexit is likely to continue to impact the GBP/EUR exchange rate throughout the session.
However, also potentially driving the Pound will be a speech by BoE Governor Mark Carney on Wednesday.
This could see Sterling slump sharply should Carney strike a more cautious tone, particularly in regards to an August rate hike.
Meanwhile in terms of the EUR exchange rate, movement this week is likely to be driven by a batch of German economic data.
This could see the Euro tick higher towards the end of the week as economists forecast Germany’s latest inflation and unemployment figures will help to bolster confidence in the Eurozone’s largest economy.