EUR to GBP Exchange Rate Holds Ground Thanks to Solid Eurozone Ecostats

February 28, 2017 - Written by Tim Boyer

STORY LINK EUR to GBP Exchange Rate Holds Ground Thanks to Solid Eurozone Ecostats

The Euro to British Pound exchange rate looked to extend its weekly highs on Wednesday afternoon and moved at a rate of over 0.3% towards the end of the European session.

Investors continued to return to the Euro thanks to Germany’s better than expected February inflation projections, which unexpectedly improved from 1.9% to 2.2% and beat the forecast 2.1% year-on-year.

[Previously updated 28/02/2017]

The Euro to Pound exchange rate continued to edge higher on Tuesday after its solid Monday recovery as Eurozone ecostats impressed. The Pound’s Brexit jitters faded on Tuesday after the British currency’s Monday selloff.

EUR/GBP opened this week at the level of 0.8472 and jumped around half a pence during Monday trade. By Tuesday morning the pair had reversed most of last week’s losses and trended in the region of 0.8525.

EUR Sturdies on French Polls and Eurozone Ecostats

After slumping for most of last week, the Euro has seen a shift to the upside this week thanks to improved political and economic outlooks.

Polls published over the weekend indicated that independent French Presidential candidate Emmanuel Macron was gaining against anti-EU candidate Marine Le Pen.

Euro investors remain jittery on the possibility of a populist President in France but this allowed the shared currency to recover from last week’s falls.

This week’s Eurozone ecostats have also impressed. Monday’s Eurozone business confidence figure was expected to improve to 0.79, but instead rose from 0.76 to 0.82.

Tuesday’s session followed with solid French stats. France’s Q4 2016 Gross Domestic Product (GDP) figures improved from 1.0% to 1.1% year-on-year as predicted while quarterly growth came in at 0.4%.

GBP Settles after Monday Selloff

Tuesday saw the Pound’s movement calm after a broad selloff throughout Monday’s session. While EUR/GBP remained near Monday’s highs on Tuesday, its advances slowed considerably as Sterling strength returned.
When markets opened this week, the Pound was undermined by fresh rumours that Scotland would soon announce a second Scottish independence referendum, as well as rumours that UK Prime Minister Theresa May would cut off EU free movement to Britain after activating Article 50.

Later in the day, analysts suggested that neither of these rumours were worth worrying about yet. UK government officials indicated that free movement would be part of Brexit negotiations and a second Scottish independence referendum cannot go ahead without the greenlight from Theresa May.

EUR/GBP Forecast: Economic Calendar Heats Up in Second Half of Week

The Euro to Pound exchange rate is more likely to be influenced by economic data later in the week, with key figures being published for the Eurozone and Britain.

Wednesday will be a key day for German data. February’s German employment stats will be published in the morning, followed by Germany’s preliminary February inflation results in the afternoon.

Thursday will be another key one for the Eurozone. January’s Eurozone unemployment rate, as well as February’s preliminary yearly Consumer Price Index (CPI) figure will be published.

The main sources of influence for Pound trade will be Markit’s February UK PMIs. Manufacturing will be published on Wednesday, followed by construction on Thursday and the highly anticipated services and composite prints on Friday.

If UK services figures beat expectations it will relieve concerns that Britain’s retail sector has begun to slow significantly in 2017. This may also lead to new hopes that the UK economy could be resilient enough to support tighter monetary policy from the Bank of England (BoE) in the future.

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TAGS: Daily Currency Updates Euro Forecasts