Pound Euro (GBP/EUR) Exchange Rate Steady Following Yesterday’s Busy Day for BoE
Following news that the Bank of England (BoE) voted unanimously to bump interest rates up by 25 basis points, the Pound (GBP) took a tumble against the Euro (EUR) in light of BoE Governor Mark Carney’s dovish accompanying statement.
Carney suggested that interest rates may not increase again for some time, counteracting any growth Sterling might have made in the wake of the long-awaited rate hike.
Much of Carney’s caution runs parallel to fears of a no-deal Brexit, which would likely see the UK economy take a hit, and it was this sentiment that led to a downturn in investor confidence in the Pound.
The Pound is trading narrowly against the Euro today with neither currency able to achieve traction.
UK Prime Minister Theresa May is due to meet France’s President Emmanuel Macron this evening to discuss her so-called Chequers plan.
Having been firmly put down by the EU’s chief Brexit negotiator Michel Barnier, May’s ‘soft-Brexit’ strategy is on uneven ground, forcing her to look directly to EU leaders to gain support.
While it is not expected that this evening’s meeting will produce any noteworthy Brexit developments, May swaying Macron’s resolve in favour of her customs proposals – as uncertain as this is – may see a rise in GBP investor confidence.
The Euro (EUR) was hindered today by declines in the Eurozone’s latest PMI data, ensuring that the common currency couldn’t get off the block.
Composite and services PMIs for July fell against last month’s figures as predicted, but the latter data decreased even more than forecast, dropping a point from 55.2 to 54.2.
Retail sales for the Eurozone also let the Euro down, with the figure failing to meet the forecast 0.4%, instead staying on a steady 0.3% from June.
Without any further key data and barring any major political developments, the Pound (GBP) may struggle against the Euro (EUR) at the start of next week’s session.
With little data on Monday, exchange rates across the board may be fairly muted, although the Euro may take a blow from Germany’s latest factory orders figures, which analysts predict may be substantially lower than last month’s.
EUR might gain some ground on Tuesday with Germany again releasing data – this time in the form of their trade balance for June, with a sizeable increase slated by forecasters.
Sterling’s first major data release of the week is due out on Friday, taking the form of the latest GDP growth figures, so GBP may find itself at the mercy of Brexit developments until then.