GBP/EUR Recovering, but Could Take another Hit from Retail Surveys

February 23, 2017 - Written by Toni Johnson

STORY LINK GBP/EUR Recovering, but Could Take another Hit from Retail Surveys

The British Pound to Euro exchange rate was sold from its weekly highs on Friday afternoon as traders expected a relatively quiet week ahead for Sterling demand.

Britain’s economic calendar will be relatively quiet until Markit’s February PMIs are published later in the week. The Euro, on the other hand, will be influenced by political concerns and domestic ecostats throughout the week that will cause movement in GBP EUR.

[Previously Updated 23/02/2017]

Fears of a far-right victory in the French elections continue to soften the Euro, allowing GBP/EUR to make modest gains.

Weak GBP Recovers from GDP Worries

Correctional trading has helped the Pound to Euro exchange rate to recover from yesterday’s mixed GDP results.

Quarter-on-quarter growth, having already printed ten basis points above forecast in the first estimate, was hiked even higher to 0.7% in the second round of projections.

But year-on-year growth was cut from 2.2% to 2% and investors were also concerned to see a fall of -1% in business investment.

Markets were more interested in the outlook for the first quarter of 2017 than they were the figures from last year.

Speaking of the fall in investment, Frances O’Grady, TUC General Secretary, commented;

‘It’s very worrying to see that business investment is already falling with the challenges of Brexit ahead. If this trend continues, working people will pay the price through weaker wages and fewer jobs.’

EUR Losses Waning as Centrist Politician Throws Backing behind Macron

A surprise alliance between French Presidential candidates François Bayrou and Emmanuel Macron has softened investor fears of a victory for Marine Le Pen in this year’s elections.

Bayrou, 65, is a centrist politician and veteran of three Presidential elections. The threat from Marine Le Pen’s rising popularity has seen him take the extraordinary step of sacrificing his own campaign in order to throw his backing behind Macron.

Macron was originally expected to be the loser of the first round of voting at the end of April, with Le Pen later defeated by Francios Fillon during the second round two weeks later.

However, Fillon has been dogged by scandal after it emerged he may have paid family members, including his wife, hundreds of thousands of Euros’ worth of public money for work they did not do under his employment.

The boost to Macron’s campaign from Bayrou’s backing has strengthened the likelihood that he will survive to face off against Le Pen in the second round.

This has boosted the Euro, as Macron offers a much more stable outlook for French politics, particularly as, unlike Le Pen, he has no plans to withdraw France from the Eurozone.

GBP/EUR Forecast; CBI Data Could Further Weaken UK Outlook

Today’s Eurozone data has already been released, leaving only UK reports to influence the GBP/EUR exchange rate.

Retail survey figures from the Confederation of British Industry (CBI) could further soften the outlook for consumer spending if they report that British businesses are seeing softer demand and activity.

If the data weakens, GBP/EUR could give up the day’s gains, although lingering caution over the French elections could leave the Euro too weak to make much of an advance, if any.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts