Euro loses ground against Sterling
On Friday the GBP/EUR exchange rate, like previous weeks made gains of nearly a cent as the rate returned to a level above 1.13. Sterling could now be set for a climb higher with 1.14 in the sights in the week ahead. Last week was volatile after the Bank of England interest decision and following comments regarding future rate rises the week before, which saw the rate fall from the mid 1.14’s to 1.11. Sterling keeps finishing weeks on a high but come Monday the rate has often dropped by half a cent, as indead has been the case once again this morning. If you’re waiting for a moment to buy Euros then next week could be a good time for you to once again trade at a multi month high.
More Euro Confidence Data
Friday’s Purchasing Managers Index (PMI) data for services once again indicated optimism in the Eurozone, as confidence amongst executives surveyed was higher than expected. The Producer Price Index data also came out better than expected with the costs of making consumer goods growing. Considering the good reading the release did very little to prevent Sterling making gains against the Euro. Which does lead to thoughts that the data is only giving a one-sided story. Investors are obviously seeing past the confidence and now waiting for the economic data to show if there is growth.
The GBP/EUR exchange rate has been improving of late which is mainly down to the improvements in the Brexit discussions where there appears to be some movement. Should the UK start to get some of the results they have been looking for with a trade agreement then I wouldn’t be surprised to see the rate move above 1.15. The reason the rate dropped below 1.10 was due to major concerns surrounding a deal but now there has been over a 5% increase those concerns look like they have decreased.
Key events to watch out for this week
There is some key events due this week that could impact GBP/EUR rates. We are expecting UK Consumer Price Index (inflation data) on Tuesday and the same data due for the EU on Thursday. Neither are expected to drop, with analysts predicting a figure of 3.1% for the UK.
On Tuesday we should also see EU Gross Domestic Product (GDP) figures, released during the morning.
This week will also offer up speeches from key Central Bank heads. Mark Carney (Governor of the Bank of England and Chairman of the Monetary Policy Committee) will speak on Tuesday morning at 10:00am and we also have two speeches from Mario Draghi (President of the European Central Bank), the first on Tuesday at 10:00am and the second on Friday at 08:30am.