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EUR to GBP Exchange Rate Hits Weekly Low Ahead of ECB Meeting

September 6, 2017 - Written by James Fuller

Underwhelming Eurozone data and a Pound recovery from its recent lows have seen the Euro to British Pound exchange rate drop again this week.

The pair trended near the level of 0.9132 – its worst level in over two weeks. However, it remains relatively close to last week’s 8-year-high of 0.9306.

EUR Demand Weighed by ECB Uncertainty


Investors have been selling the recently strong Euro from its highs this week, amid speculation that the European Central Bank (ECB) could be concerned about the shared currency’s value.

As a result, recent underwhelming Eurozone data has just given investors more reason to sell the shared currency.

Tuesday saw the publication of Markit’s final August PMIs, which fell short of projections in both services and composite prints.

Wednesday’s Eurozone data from July was disappointing too. Germany’s July factory orders results were forecast to come in at 0.1% but instead dropped to -0.7%. Germany’s August construction PMI slowed from 55.8 to 54.9.

The day’s retail data was disappointing too. Italy’s July retail sales results were disappointing in both monthly and yearly prints, while the Eurozone’s August retail PMI came in at just 50.8.

GBP Recovers from Lows


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Investors have been buying the highly undervalued Pound back up from its lows this week, despite Britain’s disappointing August PMIs.

Britain’s services sector saw slower than expected performance in August according to Markit’s PMI results, worsening concerns that Britain could see much slower activity or even a recession in the long-term.

Pound investors have largely overlooked the results so far.

The outlook for both the Pound and UK economy are relatively grim, but Sterling remains undervalued regardless and some analysts believe further potential losses for the Pound would be limited because of this.

EUR/GBP Forecast: ECB Meeting in Focus


Thursday will be a highly important session for Euro exchange rates, as the European Central Bank (ECB) will hold its September policy decision.

Investors expect the bank will remain cautiously optimistic about the Eurozone’s economic recovery. Many also expect the bank will make fresh warnings on the strength of the Euro.

If the bank takes a more dovish stance than expected or indicates it may need to keep its quantitative easing (QE) program in effect for a longer period of time, the Euro is likely to weaken and EUR/GBP will fall.

On the other hand, if the bank gives more details than expected on QE adjustment or hints at a more hawkish tone, the Euro will strengthen towards the end of the week.

As for the Pound, it could be influenced by Friday’s UK ecostats.

Friday will see the publication of Britain’s trade balance, manufacturing production and industrial production results from July. Consumer inflation expectation figures for Q3 will also be published.
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