The Pound to Euro (GBP/EUR) exchange rate traded in a wide range last week as rising Brexit uncertainty prompted some notable GBP volatility.
Last Week: Brexit Jitters Result in Wild Swings in Sterling (GBP) Exchange Rates
Trade in the GBP/EUR exchange rate was volatile last week as Brexit anxiety rocked the pairing.
The most dramatic movement was seen in the first half of the session, with GBP/EUR plummeting to a seven-month low after both candidates in the Conservative leadership contest took a hardline stance against the Irish backstop, something which is seen as greatly increasing the chances of a no-deal Brexit.
However, Sterling was able to claw back most of its losses in the second half of the week, thanks to stronger-than-expected UK retail sales in June bolstering hopes that the UK economy will avoid a contraction in the second quarter.
Meanwhile, it was a fairly quiet session for the Euro last week, with the only major release being the Eurozone’s latest economist sentiment index, which revealed sentiment in the bloc remained gloomy in July.
Concerns that the Italian coalition is close to collapse also weighed on the common currency.
Three Things to Watch out for This Week
- New UK Prime Minister
This week Pound movement will be dominated by UK political developments and the announcement of the new PM.
- ECB Rate Decision
In the spotlight for EUR investors this week will be the European Central Bank’s July policy meeting, with the focus likely to be on the ECB’s forward guidance and how it plans to introduce fresh stimulus measures later in the year. Indications that stimulus will be adjusted in September would be EUR-negative.
- Eurozone PMIs
Also likely to impact the Euro this week will be the publication of the Eurozone’s latest PMI figures, with an expected dip in private sector growth in July likely to drag on the single currency.
Pound to Euro (GBP/EUR) Exchange Rate Outlook
Expect the GBP/EUR exchange rate to remain highly volatile this week, with a switcheroo at Number 10 and the ECB’s latest policy meeting likely to result in some dramatic swings.