Pound Sterling to Euro (GBP/EUR) Exchange Rate on Track for 10th Consecutive Weekly Loss

Pound to Euro Exchange Rate Likely to End Week Lower despite Rebounding from Worst Levels

While the Pound Sterling to Euro (GBP/EUR) exchange rate attempted to put in a strong rebound attempt yesterday, most of these gains were ultimately temporary as the Pound (GBP) lacked the drive needed to sustain a solid advance.

Since opening this week, GBP/EUR has been trending lower within the interbank region of 1.11.

GBP/EUR touched on its worst levels since January in the middle of the week, and while it has recovered slightly it still trends almost a third of a cent below the week’s opening levels.

The Pound found it a little easier to recover from its worst levels as mixed Eurozone data left the Euro (EUR) weaker, amid speculation about a more dovish European Central Bank (ECB).

However, in the end the Euro remained more appealing than Sterling this week, simply because the Eurozone outlook has been more steady than that of other major nations.

Pound (GBP) Exchange Rates Find Limited Support on Bank of England (BoE) Comments

The Pound (GBP) saw a jump in demand during Thursday’s European session.

This was due to numerous factors, including weakness in rivals like the Euro (EUR) and US Dollar (USD), but the British currency also found some support due to yesterday’s fresh Bank of England (BoE) news.

The Bank of England published its latest financial stability report, and the report indicated that the bank expected Britain’s banks and financial sector would be able to survive a worst-case scenario no-deal Brexit or a trade war.

Investors were a little reassured by the bank’s confidence that Britain’s financial system would survive such events, though BoE Governor Mark Carney did continue to warn that these outcomes would still cause considerable volatility and damage in Britain’s economy.

Yesterday’s Pound jump on this support was short-lived as the possibility of a no-deal Brexit still dominates the Pound outlook. However, while GBP/EUR’s has fallen back from yesterday’s gains, the pair is still edging higher today.

Euro (EUR) Exchange Rates Lack Direction amid Mixed Eurozone Data and ECB News

The Euro (EUR) has been unable to hold its best levels in months against the Pound (GBP), as the shared currency hasn’t been hugely appetising for investors this week either.

Investors have remained anxious about the Eurozone’s economic outlook, as the bloc’s latest data has not been strong enough to indicate that the economy is emerging from the slowdown earlier in the year.

Yesterday’s German inflation stats had some stronger than expected prints, which helped to support the Euro slightly, but today’s German wholesale prices data fell short of forecasts.

Lasting concerns about the health of German trade and Germany’s economy overall are keeping European Central Bank (ECB) easing speculation alight.

Yesterday’s European Central Bank meeting minutes data did little to inspire Euro movement either. The bank was about as cautious as expected in the report.

Still, comments from ECB Official Benoit Coeure indicated that the bank may not be as quick to ease policy as markets currently expect, which did help the Euro to avoid major losses.

Pound to Euro (GBP/EUR) Exchange Rate Could Shift on Political Developments

Next week is set to be a fairly big week for UK and Eurozone data, with many notable datasets due for publication.

These stats could influence Central Bank speculation if they surprise investors.

Tuesday will see the publication of UK job market data, Eurozone trade data and Eurozone economic sentiment, followed on Wednesday by UK and Eurozone inflation rate stats. UK retail sales data will be published on Thursday.

While Britain’s economic calendar appears particularly busy next week though, Pound (GBP) investors may actually focus most on UK political developments.

With just over a week to go until the Conservative Party leadership contest concludes and Britain’s next Prime Minister is chosen, any surprising news in domestic politics or Brexit could be hugely influential for the Pound to Euro (GBP/EUR) exchange rate.

Josh Jeffery

Contact Josh Jeffery