Last week’s high: €1.1461
Last week’s low: €1.1356
Pound Euro Turbulence Caused by Brexit Problems
The Pound made a mid-week advance against the Euro last week, but failed to maintain this lead and closed trading on Friday near the week’s opening exchange rate.
Brexit-related issues repeatedly panicked GBP traders and caused Pound Sterling losses – among the alarming news was a potential revolt from the Democratic Unionist Party (DUP).
DUP MPs threatened to vote down the government’s budget if Northern Ireland were kept in the EU customs union after Brexit, which caused initial Pound losses.
Downing Street later rejected indefinite membership of the customs union, but whether this satisfied the DUP or angered EU negotiators was unclear.
Euro traders were mostly focused on Italy last week – the Italian government continued to butt heads with the European Commission over budgetary spending.
Neither side made clear headway in resolving the dispute, which had a limiting factor on EUR/GBP exchange rate gains.
Euro Outlook: GBP/EUR Volatility ahead on UK Earnings Stats
This week’s first major data will come from the UK, covering reported changes to jobless benefit claimants, the unemployment rate and the pace of wage growth.
The outlook isn’t good for the GBP/EUR exchange rate, as slowing wage growth is forecast alongside a rise in the number of jobless claims.
The unemployment rate, which at 4% is at the lowest level since 1975, isn’t anticipated to change so might not provide much support to Pound Sterling.
What may be a bad start on UK jobs market data could go to additional GBP/EUR exchange rate losses on UK inflation figures.
These are set to show slower monthly and annual inflation during September, which could weaken the Pound because this would lower the odds of a 2019 Bank of England (BoE) interest rate hike.
The potential redemption for Pound Sterling will be late-week retail sales figures and a speech from BoE Governor Mark Carney.
Retail sales growth and Mr Carney’s backing of a near-term BoE interest rate hike could be enough to spark GBP/EUR exchange rate gains, in the event of any prior losses.
For Euro traders, the main news will be ZEW measurements of economic confidence and later inflation rate figures.
Falling ZEW readings could drain Euro trader confidence, although the single currency might advance if higher inflation is confirmed in September.
09:30 UK Jobless Claims
09:30 UK Unemployment Rate
09:30 UK Average Earnings
10:00 EU ZEW Economic Sentiment Index
09:30 UK Inflation Rate
10:00 EU Inflation Rate
09:30 UK Retail Sales
16:30 UK Bank of England (BoE) Governor Mark Carney Speech
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