Pound to Euro Exchange Rate Trends Near 2018 Lows as Week’s Session Draws to a Close
UPDATE: On Friday afternoon, the Pound Sterling to Euro (GBP/EUR) exchange rate continued to trend within the region of 1.11 – lows that it has not seen since November 2017.
Amid fresh concerns that the UK could be headed for a ‘no deal’ Brexit, and underwhelming UK data, investors have had no reason to buy the Pound.
GBP/EUR edged slightly away from its worst levels on Friday afternoon, but the pair is on track to have lost over a cent this week.
Next week’s UK economic calendar will be quieter, but investors may sell the Euro (EUR) if the upcoming European Central Bank (ECB) policy decision is more dovish than expected.
Pound to Euro (GBP/EUR) Exchange Rate Rebounds Slightly from 2018 Lows
UPDATE: After tumbling to the interbank level of €1.11 on Thursday and hitting its worst levels since November 2017, the Pound Sterling to Euro (GBP/EUR) exchange rate rebounded slightly in the middle of the European session.
At the time of writing, GBP/EUR is trending closer to the key level of €1.12 as investors bought the Pound from its cheapest levels ahead of the weekend.
Pound to Euro (GBP/EUR) Exchange Rate Holds near Lows as Euro Benefits from USD Weakening
A slew of underwhelming UK ecostats, Brexit jitters, and now a late-week boost to Euro (EUR) strength has left the Pound Sterling to Euro (GBP/EUR) exchange rate on track to end the week near its worst levels.
Since opening this week at the interbank level of €1.13, GBP/USD has tumbled and since Tuesday has been trending in the region of €1.12.
This has been the longest period GBP/EUR has trended this low since the beginning of the year, and on Friday GBP/EUR slipped to a low of €1.11 – its worst level since November 2017.
As the Brexit outlook continues to worsen and UK data indicates that Britain’s economy hasn’t been as resilient as hoped, the Pound (GBP) has lost the support of much of the market optimism seen in recent months.
On top of this, the Euro strengthened on Friday due to broad-based weakness in the US Dollar (USD), despite the shared currency’s mixed movement earlier in the week.
Pound (GBP) Exchange Rates Suffer Poor UK Data and Brexit Jitters
A week of Brexit concerns and poor UK ecostats have kept significant pressure on the Pound (GBP) and leaving the British currency unappealing right through the end of the week.
Investors have been hesitant to buy into the Pound as UK Prime Minister Theresa May’s government continues to struggle in passing Brexit bills through Parliament due to widespread disunity within her own Conservative Party.
Pressure from ‘hard Brexit’ supporters for a clean break with the EU, as well as pressure from softer Brexit supporters, have made investors anxious that UK-EU Brexit negotiations could end with a worst-case scenario ‘no deal’ Brexit.
Sterling weakness was only exacerbated in the second half of the week by disappointing UK inflation and retail sales results.
Both figures indicated the UK economy was not as resilient as hoped and dented Bank of England (BoE) interest rate hike expectations. This made it easier for a stronger Euro (EUR) to gain on Sterling at the end of the week.
Euro (EUR) Exchange Rates Benefit from US Dollar (USD) Weakness
Following days of mixed trade on this week’s underwhelming Eurozone inflation results and ongoing concerns about how US trade protectionism could negatively impact the Eurozone economy, the Euro (EUR) saw stronger demand on Friday.
The shared currency benefitted from broad weakness in the US Dollar (USD) at the end of the week, as the US-China trade spat escalated.
Overnight, US President Donald Trump criticised the recent strength of the US Dollar and even appeared displeased about the Federal Reserve’s higher US interest rates.
It followed Thursday’s news that China seemed to be allowing its currency, the Chinese Yuan (CNY), to fall as a countermeasure against US trade tariffs.
The developments fuelled market concerns about the possibility that a currency war could break out alongside the trade war. As investors sold the US Dollar, the currency’s rivals, including the Euro, became comparatively more appealing.
Pound to Euro (GBP/EUR) Forecast: Key Eurozone News throughout Next Week
Amid a lack of notable UK data due for publication next week, the Pound to Euro (GBP/EUR) exchange rate is more likely to be driven by Brexit developments, trade policy news and, of course, the week’s slew of key Eurozone data.
It may take a lot for the Pound (GBP) to mount a recovery following its recent plunge, but investors may feel more willing to buy the cheaper British currency back from its worst levels if upcoming Eurozone news disappoints investors.
Monday will see the publication of the Eurozone’s July consumer confidence survey projections, with French business confidence due on Tuesday, German business confidence on Wednesday and German and French consumer confidence on Thursday.
Markit’s July manufacturing PMI projections will be published on Tuesday and are likely to be the best indication so far of how the Eurozone economy has been performing this month.
The biggest news of the week is likely to be the European Central Bank’s (ECB) July policy decision, which will be held on Thursday. Any change in tone the bank makes regarding US trade protectionism or the Eurozone economy could drive GBP/EUR.
The Pound to Euro (GBP/EUR) exchange rate would be most likely to mount a recovery if there are any unexpectedly positive developments in Brexit negotiations, however.