Pound Euro (GBP/EUR) Exchange Rate Steady as UK Retail Activity Slows
UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate continues to trade close to its opening levels this morning despite the Confederation of British Industry’s (CBI) latest distributive trades data beating expectations.
While the index may have beaten market forecasts it still revealed retail activity slowed this month, leaving the Pound (GBP) exchange rate largely unfazed.
At the same time the EUR exchange rate remains rangebound this morning as Germany’s latest business climate figures reveal business optimism continues to slide in July.
Euro (EUR) Exchange Rate Muted as Markets Await Trump-Juncker Meeting
The Euro (EUR) is in a holding pattern this morning, with EUR investors reluctant to make any moves ahead of a key meeting between US President Donald Trump and European Commission President Jean-Claude Juncker later today.
The talks come amid fears that the US and EU could become embroiled in a trade war as Trump levels threats of tariffs against EU exports, something which places considerable pressure on the single currency.
Juncker has stated his goal in talking with Trump is to ‘explain and find out how to prevent a trade war.’
However, it is unclear how successful this will be, with Trump appearing to be pushing for a complete shake up in global trade by requesting all tariffs be scrapped, something Juncker is unlikely to sign off on.
The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!
— Donald J. Trump (@realDonaldTrump) July 25, 2018
Markets are bracing for some volatility in both the Euro and US Dollar (USD) following the meeting, with observers pessimistic that it will result in an easing of trade tensions.
At the time of writing GBP/EUR is virtually unchanged from this morning’s opening levels, with the pairing holding onto the gains made on Tuesday.
Pound Sterling (GBP) Exchange Rates Stable on Brexit Optimism
The Pound (GBP) meanwhile is holding steady this morning as GBP investors consolidate their gains following yesterday’s announcement that Theresa May would be taking personal charge of Brexit talks.
The shift in how the UK will approach negotiations with the EU proved to have a positive impact on Sterling, with markets hopeful that the PM’s direct approach to talks will result in more progress being made.
Furthermore GBP investors appear hopeful that the PM’s ‘shifting of the Whitehall deckchairs’ marks a shift towards a ‘soft’ Brexit as the move sidelines some of the more ardent Brexiteers within her party.
GBP/EUR Exchange Rate Forecast: Markets to Focus on ECB’s Forward Guidance Tomorrow
Looking ahead to Thursday’s session, movement in the Pound Euro (GBP/EUR) exchange rate is expected to be largely driven by the outcome of the European Central Bank’s (ECB) latest policy meeting.
While the bank is not expected to make any policy changes in this month’s meeting, the Euro (EUR) could see some movement if the bank expands on its plans to wind down its quantitative easing programme by the end of 2018.
However, the bank’s forward guidance is also likely to play a key role in how the EUR exchange rate performs on Thursday, with any dovish outlook likely to weaken the single currency.
Meanwhile the Pound (GBP) exchange rate may struggle towards the end of this week’s session if UK house price growth has slowed as expected in July.