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Pound Euro Exchange Rate Slumps On Hawkish ECB, Weak UK Data

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The Pound Euro exchange rate retreated to a two-week low this week, with the pairing being undermined by hawkish European Central Bank (ECB) commentary and disappointing UK data 

The Euro opened this week’s shortened session on solid footing, as EUR investors were relieved by polls showing that Emmanuel Macron appeared to have consolidated his lead over far-right rival Marine Le Pen in the upcoming French election. 

This upside in EUR exchange rates was then bolstered by stronger-than-expected Eurozone trade figures and a robust industrial production print. 

The Euro then roared higher in the latter half of the week following remarks from European Central Bank Vice President Luis de Guindos claiming an interest rate hike in July is ‘possible’. 

While the single currency was unable to sustain its best levels for long, EUR exchange rates crept higher again at the end of week after the latest Eurozone manufacturing and services PMIs printed above expectations. 

Meanwhile, the Pound struggled to attract support through much of this week, as Sterling sentiment was undermined by UK political uncertainty. 

This came amid fresh doubts over Boris Johnson’s premiership as it was confirmed the PM would face an inquiry into whether or not he mislead parliament over the ‘partygate’ scandal.  

Sterling was then sent into a tailspin at the end of the week after the latest UK retail sales and PMI releases disappointed, with the data raising fresh concerns over a slowdown in consumer spending. 

Eurozone inflation in the spotlight 

Turning to the start of next week’s session, it’s likely the result of the French election will initially determine the direction of the Euro, with the single currency likely to firm if Macron is able to claim victory. 

In terms of data a key focus will be on the release of the Eurozone’s consumer price index. 

If April’s preliminary CPI figures report another acceleration of inflation this could bolster expectations the ECB will need to act sooner rather than later, bolstering the Euro in the process. 

Also of note to EUR investors will be the Eurozone’s latest GDP release. Markets will be looking for any sign the war in Ukraine may have had a notable impact on economic activity in the bloc, with the Euro likely to weaken if growth undershoots expectations.  

Meanwhile, the only UK data of note next week will be the fairly low-impact Confederation of British Industry (CBI) industrial trends and distributive trades indexes. 

Otherwise the GBP/EUR exchange rate is likely to remain sensitive to events in Ukraine, with the pairing potentially being infused with fresh volatility is peace talks remain at an impasse. 

If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.  

Foreign Currency Exchange (Forex)

Pound Euro Exchange Rate Rebounds As Russia Tensions Trigger EUR Sell-Off

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The Pound Euro exchange rate bounced off a seven-month low this week as rising tensions between Russia and the EU saw the Euro slide.

The Euro started the week strong as EUR investors were relieved that Vladimir Putin did not declare all-out war on Ukraine during his Victory Day speech.

As the week went on, the single currency wavered in a narrow range. Energy security fears offset hawkish comments from policymakers at the European Central Bank (ECB) as Ukraine halted some Russian gas supplies to Europe.

Volatility then followed as the Euro surged to a seven-month high against a weakening Pound before EUR came crashing back down.

After EU member state Finland signalled its intention to apply for Nato membership, the Kremlin warned that Russia would retaliate. Following the earlier interruption in gas flows via Ukraine, this latest flare-up reminded EU investors just how rapidly the current crisis could deteriorate further.

Meanwhile, Sterling enjoyed some dip-buying on Monday after last week’s Bank of England (BoE) inspired slump. This kept GBP level against a rising Euro.

The UK currency then wobbled throughout much of the week. A generally upbeat market mood buoyed the Pound, while downbeat retail sales figures and renewed concern over the Northern Ireland protocol pressured it.

After tumbling amid a bout of risk aversion in Wednesday’s overnight trade, Sterling then surged higher against the Euro, despite UK GDP unexpectedly contracting by 0.1% in March.

The upside came as an oversold Pound attracted some dip-buying, while GBP also benefitted from some flows away from the Euro as European investors ditched the single currency.

Looking ahead to next week’s trade, Eurozone data is fairly sparse. Therefore, EUR could trade primarily on headlines surrounding the Russia-Ukraine crisis. If tensions rise further over the prospect of Finland and Sweden joining Nato then the single currency could decline.

Meanwhile, the Pound faces some high-impact data releases, starting with the UK’s unemployment rate on Tuesday.

Perhaps the most important release is Wednesday’s CPI for April. Economists expect UK inflation to have jumped from 7% to an eye-watering 9.1%. While higher inflation may force the BoE to keep hiking rates, it could also spell disaster for the UK economy. As a result, GBP may slide.

Finally, we have the UK’s April retail sales on Friday. If they show growth, it may bolster GBP, but another decline will only add to Sterling’s woes.

Brexit news may also play a big part in GBP/EUR. If the Northern Ireland protocol dispute escalates, the Pound could suffer.

If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.

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Foreign Currency Exchange (Forex)

Pound Euro Exchange Rate Collapses To New 2022 Low On BoE’s Grim Economic Forecasts

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The Pound Euro exchange rate tumbled over 1% this week as Sterling sentiment was rocked by the Bank of England’s (BoE) latest interest rate decision.  

Pound nosedives as BoE sparks recession fears. 

The Pound plummeted this week, falling to its worst levels against the Euro since December. 

The majority of Sterling’s losses were focused in the latter half of the week, following the BoE’s latest interest rate decision. 

This saw the BoE raise interest rates by 0.25% as was widely expected, although GBP investors were surprised by hawkish split in the Monetary Policy Committee, which saw 3 of the 9 members break ranks to vote for an immediate 0.5% hike. 

This was in stark contrast to the BoE’s latest economic forecasts, which predicted inflation could climb above 10% and that the economy could contract by up to 1% in the last quarter of the year. 

The grim outlook stoked fears of a looming recession and sparked a dramatic GBP selloff. 

Meanwhile, the Euro got off to a slow start this week, after data showed a disappointing fall in Eurozone economic sentiment. 

A pullback in the US dollar then helped to buoy the euro, thanks to the strong negative correlation between the pairing, although these gains would proved short-lived as the EU’s proposed ban on Russian oil imports sparked fresh fears over European energy security. 

However EUR exchange rates then trended broadly higher at the end of the week as the currency began to attract some modest risk-off flows. 

Will a stalling of UK GDP push Sterling even lower? 

Turning to next week’s session, the GBP/EUR exchange rate could be vulnerable to additional losses with the publication of the UK’s latest GDP figures. 

Economists forecast UK economic growth will have stagnated in the first quarter of 2022, which will do little to boost hopes the UK will avoid a recession this year. 

For EUR investors the primary focus will be on Germany’s latest ZEW economic sentiment index. 

May’s index could weaken the Euro at the start of next week if economic morale in the Eurozone’s largest economy is shown to have deteriorated again. 

If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.  

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Pound Euro Exchange Rate Rocked By Concerns Over Russian ‘gas Blackmail’

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The Pound Euro exchange rate traded erratically over the past week as markets were unsettled by the potential disruption of European energy supplies. 

GBP/EUR fluctuates amid energy concerns, UK economic concerns 

The Euro initially firmed this week as Emmanuel Macron’s victory in the French election before quickly succumbing to its negative correlation with the US dollar as the latter surged. 

The US dollar’s bullish run remained a thorn in the side of the Euro throughout the week. 

The Euro attracted some short-lived support following comments from European Central Bank (ECB) policymaker Martins Kazaks, in which he expressed his support for a July interest rate hike, but these quickly evaporated in the face of Russia’s move to halt gas exports to Poland and Bulgaria. 

This sparked concerns over the Eurozone’s energy security as the Kremlin warned other ‘unfriendly countries’ could be cut off. 

The end of the week then saw the publication of the Eurozone’s consumer price index, which despite reporting inflation in the bloc climbed to a new record high, was unable to offset a weaker-than-expected Eurozone GDP print. 

Meanwhile the Pound also struggled to find direction this week, with Sterling sentiment suffering as investors reined in their Bank of England (BoE) rate hike bets. 

Infusing further volatility into GBP exchange rates were concerns over the UK’s economic trajectory, in the wake of reports UK insolvencies have risen to a ten-year high. 

All eyes on the BoE next week 

Turning to the start of next week’s, the spotlight will undoubtedly be on the Bank of England’s latest interest rate decision. 

The general consensus is the BoE will deliver its fourth consecutive interest rate hike when it concludes its May policy meeting on Thursday. With the hike largely priced in the focus will be on the bank’s forward guidance. 

There are considerable doubts the bank will pursue further rate hikes over the summer, any confirmation of which is likely to weigh on Sterling. 

Of course, given the BoE’s reputation for being an ‘unreliable boyfriend’ there remains a risk the bank could stay its hand next week, in a move which would have disastrous consequences for the Pound. 

Meanwhile, heightened tensions between the EU and Russia may drag on the Euro next week. 

If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.  

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