On Wednesday, the Euro opened trading against the Pound at a level of £0.8870 and closed slightly higher around £0.8884.
Despite the overall appreciation, the Euro to Pound exchange rate (EUR/GBP) was volatile during the day because of GBP trader reactions to news of higher UK inflation rates.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Dips despite Support from US Dollar Crash
The Euro (EUR) has fallen against the Pound (GBP) today, but has elsewhere been supported and risen against peers like the US Dollar and Canadian Dollar.
This overall rise in Euro demand comes from a sharp decline in the value of the US Dollar, which has driven up demand for the more stable Euro.
There is currently high uncertainty about whether the US and China will be able to de-escalate the current trading conflict, with recent tariff increases clashing with reports of continued bilateral discussions.
The Euro and commodity currencies like the Australian Dollar and New Zealand Dollar have benefited from this uncertainty, which has made the US Dollar an unattractive option at present.
Pound to Euro Exchange Rate (GBP/EUR) Rises 0.3% as Retail Sales Stats Raise BoE Rate Hike Hopes
The Pound (GBP) has been a volatile currency today, having initially dipped against the Euro (EUR) before rising sharply on the morning’s economic data.
This has been the news that UK retail sales have continued to grow in August, beating forecasts for a month-on-month slowdown.
While the monthly and annual readings all fell, with and without fuel sales included, the fact that all figures beat forecasts was seen as good news by GBP traders.
Among other inferences, retail sales growth suggests that low UK consumer confidence levels aren’t enough to stop households from splashing out.
While the sales data has strongly supported Pound Sterling today, it is worth noting that the forecast-beating results could be down to a historically hot end to summer.
Other UK news has not been so positive – following a two-day meeting in Salzburg, EU leaders have declared that the UK’s Brexit plans ‘will not work’.
European Council President Donald Tusk has said of UK Prime Minister Theresa May’s so-called ‘Chequers plan:
‘Everybody shared the view that while there are positive elements in the Chequers proposal, the suggested framework for economic cooperation will not work, not least because it risks undermining the single market.’
Underlining how high the stakes are in Brexit talks, Mr Tusk added:
‘The moment of truth for Brexit negotiations will be the October European Council. In October we expect maximum progress and results in the Brexit talks.’
Offering a last word on the matter, UK Prime Minister Theresa May said:
‘If the political will is there on the other side, I’m confident we will reach a deal and to do so is in the EU’s interests as well as the UK’s.’
Brexit talks have effectively entered a crunch period, with recent reports suggesting that if negotiations miss the provisional November deadline then there will be no further extension.
EUR/GBP Exchange Rate Forecast: Will Eurozone PMI Slowdown Cause Euro to Pound Exchange Rate Losses?
The Euro’s (EUR) current losses against the Pound (GBP) could extend on Friday morning, when a variety of Eurozone PMI readings are due to come out.
Consisting of initial estimates for movement in September, these figures are predicted to show a slower pace of economic activity across the board in the Eurozone.
Additionally, levels of economic activity in Germany are also tipped to decline – if all readings print lower then the Euro could fall further against the Pound.
The Pound could also gain some last-minute domestic support from Friday’s Bank of England (BoE) quarterly bulletin.
This provides a national economic status update and a look at how the economy could perform in the future – the bulletin could boost GBP demand if it is sufficiently positive.
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TAGS: Euro Pound Forecasts