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Best Euro To Pound Exchange Rate Of The Week As Brexit Jitters Weigh On British Currency
The EUR GBP exchange rate continued to advance on Friday afternoon despite the shared currency being weakened by a surge in the US Dollar.
The Euro pound exchange rate looked on track to end the week near a weekly best as Brexit jitters continued to weigh on the British currency.
Meanwhile, the Euro to US Dollar exchange rate fell slightly from its best levels. December’s US Non-Farm Payroll figures, while disappointing, confirmed that the US job market remained robust and added to wage growth hopes. EUR/USD was on track to register gains this week overall regardless.
A solid uptick in German retail sales offered support to EUR/GBP, EUR/USD exchange rates, encouraging greater confidence in the outlook of the domestic economy
This stronger showing helped to boost the EUR GBP exchange rate higher ahead of the weekend, particularly as demand for the Pound remained generally limited.
However, the Euro struggled to gain any particular traction against the US Dollar, with investors bracing for the final raft of US labour market data of the Obama era.
The Euro advanced against both the Pound and US Dollar on Thursday afternoon despite strong UK and US ecostats publishing throughout the day.
The Euro was able to strengthen throughout the day partially due to weakness in its rivals, as well as the week’s optimistic Eurozone stats including PMIs and inflation.
However, if Friday’s US Non-Farm Payroll results impress USD traders the Euro may shed some of its recent gains as investors flock back into the US Dollar.
A positive run of Eurozone PMIs has helped the Euro to advance versus the British Pound and the US Dollar, although UK and US data could later soften EUR advances.
Eurozone PMIs have shown a return to growth for retail sectors across the currency bloc, helping support the recovering EUR/GBP and EUR/USD exchange rates.
All initially in contraction, the German, Eurozone and French retail PMIs have all returned to growth territory, with scores of 52, 50.4 and 50.4 respectively.
Additionally, the German construction PMI accelerated a whole point to 54.9; the latest piece of German data to suggest that perhaps the Eurozone’s powerhouse economy has found a more solid footing.
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One Pound to the Euro by the End of 2017 Forecast HSBC
Pound Sterling will resume its slide against the Euro in 2017 say forecasters at HSBC.
Germany and Spain are tipped to lead a continued Eurozone recovery whilst Sterling is undermined by the triggering of article 50 and Brexit uncertainties finally become manifest.
German growth is based on more generous benefits and Spanish on a tourism boom and export growth.
Indeed, the strengthening Eurozone will likely prompt the European Central Bank (ECB) to bring forward it’s timeline for ending its quantitative easing programme.
It is this programme, that sees the Bank buy Eurozone debt, that has largely been responsible for the Euro's multi-year weakness.
With the programme running towards the end of its life the Euro should be free to recover.
In December, the ECB announced an extension to its quantitative easing programme until the end of 2017, from a previous end-date in March 2017.
HSBC see the “hurdle” to a further extension beyond the present end date as high, due to “political pressures”.
HSBC’s Chief European Economist Simon Wells believes the ECB extended quantitative easing so as to “sidestep” potentially difficult discussions and provide a “safety net” for the European sovereign bond market during the politically sensitive elections in 2017.
However, any further extensions could meet opposition from hawkish policy makers, particularly in Germany so are unlikely.
The expected winding down of policy in H2 2017 is, therefore, likely to stimulate demand for the Euro as interest rates rise.
As such, HSBC are forecasting the EUR/GBP exchange rate to reach parity by the end of 2017.
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I’m long on this pair.
Lloyds: Pound to Dollar Exchange Rate Recovery Through 2017
Pound Sterling's sell-off against the US Dollar could be overdone according to the latest assessment of the foreign exchange pairing conducted by analysts at Lloyds Bank Commercial Banking.
The UK high-street giant has written to commercial customers this week saying they believe GBP-USD should recover towards 1.30 through the course of 2017.
The call comes amidst a time of heightened pressure on the Pound with the familiar ‘Brexit fear’ theme running high once again.
Against its G10 peers, GBP has been the worst-performing currency, ahead of the USD which has performed only marginally better.
“Uncertainty surrounding the UK’s Brexit negotiations and the potential impact of a Donald Trump presidency on US monetary and fiscal policy have been the key drivers of the recent move. Against this backdrop, domestic data have played second fiddle,” says a note from Lloyds to commercial clients, seen by Pound Sterling Live.
With many saying fears of a hard-Brexit have been reignited by Theresa May in a recent interview we would point out that absolutely nothing new has been said by the PM and find the media/market reaction odd.
Indeed, May has stated clearly this week that she sees the UK operating within the single market after Brexit.
If there is an element of misplacing amongst market players, then forecasts for a stronger GBP/USD by the end of 2017 are likely to carry some weight.
But, expect further volatility near-term.
“Near-term, the Supreme Court’s ruling on Article 50 and an upcoming keynote Brexit speech by the PM present two clear flashpoints for the Pound,” say Lloyds. “Donald Trump’s inauguration on 20 January could also increase Dollar volatility.”
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I shorted, tp is at 0.8600.
Downside Targets for British Pound Against Euro
Technical strategists at Credit Suisse have written to clients confirming they retain a negative stance on the British Pound outlook.
Technical strategists are tasked with looking at previous price action on financial charts to interpret underlying market strutcture.
Credit Suisse maintain their view the bounce in the GBP TWI (BoE) has been a correction, and they therefore expect further weakness to emerge.
The GBP TWI (Trade Weighted Index) is a basket of British Pound-based pairs that give us an overall indicator of the currency's strength.
Gains have been capped below downtrend resistance at 77.44.
"We view the recent bounce as corrective and look for a retest of the 73.43/23 lows of 2008 and 2016. Whilst these should be allowed to hold again, a break can see weakness extend to 69.00," says David Sneddon, Managing Director of Global Strategy Technical Analysis at Credit Suisse.
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Neutral at the moment.