Euro to Pound Exchange Rate Slides after Days of Resilience
Despite trending relatively closely to the week’s opening levels for most of the week, the Euro to Pound Sterling (EUR/GBP) exchange rate has been tumbling since last night. The Pound (GBP) saw a rise in demand after the latest Brexit developments.
Since opening this week at the level of 0.88, EUR/GBP spent most of the week trending within a relatively tight region.
This morning however, Brexit speculation drove Sterling higher and EUR/GBP tumbled to touch on an interbank low of 0.87. This marked the lowest level for EUR/GBP in over three months, since May.
At the time of writing, the pair trended close to these levels as the Euro (EUR) lacked the support needed to mount a recovery.
Euro (EUR) Exchange Rates Floundering amid Lack of Fresh Support
Investors have simply had little reason to buy the Euro (EUR) this week, which is making it easier for the Pound (GBP) to see a late-week advance.
German and Eurozone data continue to fuel concerns that Germany’s economy is in recession. Some signs of recovery in economic sentiment have helped the Euro to avoid further losses though.
On top of this, speculation that the European Central Bank’s (ECB) latest monetary policy easing isn’t actually as aggressive as it seems, as well as weakness in Euro rivals, have also supported the single currency this week.
Still, signs of a more hawkish Federal Reserve boosted US Dollar (USD) demand towards the end of the week, which knocked the Euro due to the negative correlation the currencies share.
Pound (GBP) Exchange Rates Jump Again Following Comments from Jean-Claude Juncker
The Pound (GBP) has held its ground for most of this week, despite underwhelming UK inflation and retail sales results as well as continued economic warnings from the Bank of England (BoE).
This has been because many investors have been awaiting the possibility of Sterling resuming the rally it saw last Friday, on the back of Brexit hopes.
Overnight comments from European Commission President Jean-Claude Juncker appear to have been enough to convince investors, because the Pound has been advancing again since last night.
Juncker appeared to take a surprisingly optimistic stance on Brexit, saying he was doing whatever he could to find a Brexit deal.
He also indicated that negotiators would accept the removal of the current Irish backstop plan if the UK could find a working alternative.
Still, analysts once again warned that these Pound gains may be limited, and that investors may be overly optimistic about Juncker’s comments.
Euro to Pound (EUR/GBP) Exchange Rate to be driven by Eurozone Ecostats and Brexit
With a lot of Eurozone data due for publication next week, the Euro (EUR) may see more inspired movement in the coming sessions.
Monday will start out the week with Markit’s September PMI projections, including the key German manufacturing projection.
Germany’s struggling factory sector is expected to see yet another month of contraction, and if the data falls short of forecasts it could lead to fresh losses for the Euro as recession fears would deepen.
Ifo’s German business confidence data on Tuesday and GfK’s consumer confidence data on Thursday will be in focus as well. Lastly, Eurozone business and consumer confidence data due on Friday may also inspire movement.
As for the Pound (GBP), the week’s UK data is unlikely to be highly influential, and market focus will once again be on developments in UK politics and Brexit.
Britain’s Supreme Court is expected to announce its decision on whether the government’s parliamentary prorogation was unlawful sometime early in the week, which is also likely to drive movement in EUR/GBP.