We’ve seen a slight spike in Pound/Euro rates this morning to €1.1350, which is within about 1% of the best we’ve seen in 8 months. There have been no data releases to cause the move, and the slight strengthening is due to reports that the EU parliament will call for the UK to have privileged access to the single market.
This is a positive move, and the EU parliament will call for the EU to negotiate an agreement to give access and membership of EU agencies. This is clearly different to what Michel Barnier has been saying until now. The markets clearly like the news, with Sterling rising higher across the board.
This week we may get further clarity on the UK’s position on what it wants from Brexit, in various speeches that are due to be given. Anything that signals progress and a lifting of the uncertainty surrounding this issue could send the Pound higher still.
What else could move Pound/Euro rates this week?
In terms of scheduled economic data releases, there are several important things to look out for this week if you’re keeping an eye on GBP/EUR rates. Tomorrow is a very important day for Sterling, as we will see the following information released:
- Average Earnings and Wage Growth data
- Jobless Numbers
- Unemployment rate
- Public Sector net borrowing
- BoE Mark Carney Speech
- BoE Inflation report
- Speeches by 3 other BoE members
Lots for the market to chew on, and it all relates to interest rates. If inflation is still running high then at some point, the Bank of England will have to raise interest rates. Higher interest rates would generally strengthen a currency due to the higher return on offer, and so this should send the Pound higher. What’s been stopping the BoE from raising rates however, is the fact that wages are growing slower that inflation, meaning real incomes have been falling. Recently, wage growth has picked up, and if these numbers due on Wednesday confirm this again, it way well send the Pound higher. If wage growth is still stagnant however, rates may fall again as the appeal of the Pound diminishes
What the BoE members say in their speeches tomorrow will also be watched very closely as to any hints to when rates may go up.
if you would like to discuss exchange rates in more detail, discuss which way the market is moving, or simply find our what exchange rate we can offer you, make a free enquiry today.