Pound Sterling to Euro (GBP/EUR) Exchange Rate Rebounds from Post-January Worst Again

Pound to Euro Exchange Rate Avoiding Further Losses with Both Currencies Weak

While the Pound Sterling to Euro (GBP/EUR) exchange rate has trended with a downside bias this week, a lack of fresh solid support for the Euro (EUR) has meant that the pair has been able to hold away from its worst levels in months.

After opening this week nearer the interbank level of 1.12, GBP/EUR has been slipping even lower into the interbank region of 1.11.

There were two occasions yesterday in which GBP/EUR hit a new multi-month-low. In the late-afternoon, the pair touched on its worst level since early-January, over five months ago.

At the time of writing on Thursday morning, GBP/EUR had rebounded from those lows again, but still remained a modest distance from them. The Euro’s data has failed to impress investors this week so far, but UK political jitters keep Sterling (GBP) from recovering.

Pound (GBP) Exchange Rate Rebound Limited by Persisting Brexit Fears

Not much notable has changed for the Pound (GBP) outlook over the past week, as no-deal Brexit fears continue to loom over both Britain’s economic outlook and the ongoing Conservative Party Leadership contest.

No-deal Brexit fears have returned in full force amid expectations that Brexiteer Boris Johnson will become Prime Minister by the end of July. Johnson has said that he would rather head for a no-deal Brexit than delay the process again.

While Johnson’s claims that a no-deal Brexit was still unlikely kept investors buying the Pound from its cheapest levels, uncertainty over how exactly Brexit will proceed is dominating the Pound outlook.

Analysts question whether a no-deal Brexit, general election, or second referendum is most likely.

Due to this uncertainty, investors are hesitant to buy the Pound back too much, and its gains have been capped.

Euro (EUR) Exchange Rates Strength Limited amid Mixed Confidence Data

The Euro (EUR) has been unable to hold near its best levels against the weak Pound (GBP) either, as investors continue to bet that the European Central Bank (ECB) will make dovish shifts to Eurozone monetary policy over the next year.

This week’s Eurozone’s data has done little to change that so far either.

German and French business and consumer confidence figures were published Monday through Wednesday, and while some figures came in stronger than expected the data was overall underwhelming.

On top of that, this morning’s Spanish Consumer Price Index (CPI) inflation rate data showed inflation climbing at its slowest pace since 2016 – and even slower than analysts predicted.

As ECB President Mario Draghi indicated last week that the bank would likely ease Eurozone monetary policy if Eurozone inflation failed to improve, this leaves investors focused on inflation stats this week.

Pound to Euro (GBP/EUR) Exchange Rate Investors Await Eurozone Inflation Projection

Much of this week’s most influential Eurozone data is still due for publication, and it will come in throughout Thursday and Friday’s sessions.

German inflation projections from June will be published this afternoon, but the biggest focus for investors will be tomorrow’s overall Eurozone inflation projection for June.

If these upcoming Eurozone stats beat market expectations, the market’s perception of Eurozone price pressures could improve. European Central Bank (ECB) interest rate cut bets would lighten and the Euro (EUR) would recover.

Other notable ecostats due for publication tomorrow include UK consumer confidence, growth, and business investment, as well as German import prices and French inflation figures.

Unless Britain’s growth report is surprising enough to notably influence the already Brexit-battered economic outlook, Pound to Euro (GBP/EUR) exchange rate investors are more likely to react to Eurozone data or UK political developments.

Josh Jeffery

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