Pound to Euro Exchange Rate Trends Near Monthly Highs as Markets Open
Thanks to stronger hopes that a UK-EU Brexit deal will be reached within the next two months, the Pound Sterling to Euro (GBP/EUR) exchange rate has seen stronger support and this was the primary reason for its recent gains.
Last week saw GBP/EUR open at the level of 1.1179 and end the week over half a cent higher – near the level of 1.1237.
On Monday when markets opened, GBP/EUR continued to hold its ground and briefly touched on a high of 1.1252. This was the best GBP/EUR level since the beginning of August.
As recent Eurozone data has been mixed and concerns are rising about US-EU trade tensions, the Euro (EUR) was unable to benefit significantly versus the Pound (GBP) on last week’s European Central Bank (ECB) news.
This left the Pound sturdier, supported by some solid domestic data and signs that Brexit negotiations were accelerating.
Pound (GBP) Exchange Rates Holds Steady in Anticipation for More Brexit Talks
At the beginning of last week, EU Chief Negotiator Michel Barnier showed confidence that a UK-EU Brexit deal could be reached in time for a major UK-EU Brexit summit planned for November.
His confidence, as well as his indication that the EU was eager to avoid a worst-case scenario ‘no-deal Brexit’, lightened ‘no-deal’ fears and improved the Pound outlook.
This left Sterling with stronger ground to trade on throughout the week, and the Euro was ultimately unable to push GBP/EUR lower again.
The Bank of England (BoE) was cautious in its September policy decision as expected and this had little impact on the Pound outlook.
Following last week’s Brexit developments, Pound investors now anticipate another big week of Brexit news could be ahead.
On Monday, UK Prime Minister Theresa May said to MPs that it was either the UK government’s Brexit deal or no deal at all, in an attempt to quieten rebels within her ruling Conservative Party.
Euro (EUR) Exchange Rates Find Limited Support on European Central Bank (ECB) Decision
Last Thursday saw the European Central Bank (ECB) hold its September monetary policy decision, which saw the bank leave Eurozone monetary policy frozen as was widely expected.
While the bank cut its growth forecasts for the Eurozone economy, investors were relieved by news that the bank had left its inflation forecasts untouched despite concerns about US trade protectionism.
The bank also reiterated its plans to unravel its quantitative easing (QE) scheme by the end of 2018. The bank will half its bond purchasing scheme in October and continue to wind it down through December.
Ultimately, the ECB remained optimistic that its monetary policy outlook had not been impacted, despite fears of US trade protectionism hitting the Eurozone economy.
On Friday, the Eurozone’s trade surplus report fell short and weighed on the Euro, but the bloc’s labour cost and wage growth stats from Q2 beat expectations and helped the Euro to avoid further falls versus a sturdier Pound.
Pound to Euro (GBP/EUR) Exchange Rate Investors Await Inflation Stats and Brexit Developments
With Pound investors awaiting the possibility of notable Brexit developments in the coming sessions, those factors are likely to remain a primary source of influence for the Pound to Euro (GBP/EUR) exchange rate.
However, key UK and Eurozone ecostats will be published throughout this week too and may also influence the GBP/EUR outlook.
The Euro could be influenced by notable comments from European Central Bank (ECB) officials on Tuesday, as ECB President Mario Draghi will be holding a speech followed by a speech from the ECB’s Danièle Nouy.
Draghi will hold another speed on Wednesday. Most of the week’s notable UK data will be published in the second half of the week too, starting with August’s UK Consumer Price Index (CPI) inflation rate report on Wednesday.
Thursday will follow with August’s UK retail sales results, and Markit’s Eurozone PMI projections for September could cause some late-week Pound to Euro (GBP/EUR) exchange rate movement on Friday.
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