Pound/Euro forecast – Good morning. The Pound has a mixed day yesterday. Initially Sterling did rather well, following some good economic data. GDP numbers came in above forecast at 0.3%, averting recession fears. We forecast that the recent negative reading was probably only a temporary dip, and so it proved to be. We also saw Industrial and Manufacturing numbers beat forecast. These results helped lift the Pound to 6-week highs.
Also helping the Pound were recently political events that make a No Deal brexit less likely. It could still happen, but markets now think the chance of leaving without an agreement on the 31st October is now 35%.
As is often the case, the gains for the Pound proved to be short lived. The speaker John Bercow announced his resignation, and this sent the Pound lower. He’s a controversial figure, as has been accused of bias in supporting efforts to thwart Brexit. In standing down, he has made a No Deal exit a little more likely, hence the fall in Sterling. Ultimately, he jumped before he was pushed, as it had already been announced that the Conservative party would stand a candidate against him in the next election, whenever that may be.
Parliament is now suspended. This means economic data could have more importance in moving exchange rates in the week ahead. Brexit developments will still run in the background however, with efforts to secure a deal on-going.
Pound/Euro forecast – What else could affect exchange rates this week?
Below I’ve listed the main data releases that could impact GBP exchange rates. To get a bespoke forecast for the currency pair you are looking for, get in touch today.
Tuesday 10th September 2019
At 09:30am this morning we’ll see the latest UK Unemployment data and wage growth figures. We expect earnings to have grown by a healthy 3.8%, and the unemployment rate to remain at record lows. If confirmed this would support the Pound. The only other data of note are some minor US releases that could affect the US Dollar.
Wednesday 11th September 2019
There are no UK releases today. It’s quiet everywhere other than some inflation data from the United States.
Thursday 12th September 2019
While there are no UK releases, GBP/EUR could move today on data from the Eurozone. Germany has inflation numbers at 7am. As the largest EU economy the numbers often affect the Euro. We also have EU wide Industrial production data, expected to be poor. We also have an interest rate decision from the European Central Bank. Rates are likely to remain on hold at 0%. Any comments made by the ECB president Mario Draghi could weaken the Euro, pushing GBP/EUR rates a little higher. Elsewhere, the USA has a raft of inflation numbers and jobless claims. Inflation could impact interest rates over in the States. We expect them to cut rates sooner or later, that could weaken the USD and help push GBP/USD rates higher.
Friday 13th September 2019
Nothing from the UK. EU Trade balance figures are therefore the only likely mover of GBP/EUR. US data today includes Retail Sales and Trade balance figures. Retail Sales are the most important, as they are a good barometer of the economy. A reading above 0.3% will send GBP/USD lower. A reading below, would likely push the rate higher.
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