Political uncertainties help GBP/EUR stand firm

STAYING on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for, over the next couple of weeks.

While the pound has been struggling against a number of the majors in recent weeks, the British currency has proven resilient against the euro.    GBP/EUR has climbed from 1.13 to 1.14 over the last two weeks, and EUR/GBP has fallen from 0.88 to 0.87.

Meanwhile, the US dollar’s continued strength has seen GBP/USD fall from 1.35 to 1.34, and EUR/USD from 1.19 to 1.17. For the pound, the last couple of weeks have been filled with mixed data, conflicting Brexit reports and dashed hopes for a near-term rate hike from the Bank of England (BoE).

Last week, Brexit speculation flared up, thanks to reports that the UK government was planning to keep Britain in an EU customs union, post-Brexit. However, Prime Minister Theresa May was quick to play down the reports, limiting demand for the pound.

Sterling was able to hold gains against a weaker euro, as Eurozone markets became anxious about the possibility of an anti-euro, populist coalition taking power in Italy. The euro also struggled in the face of US dollar strength.

Over the weekend, investors became even more bullish on the US dollar, thanks to reports that the first round of US-China trade negotiations had ended optimistically.

Pound investors are awaiting major UK ecostats, due later in the week, before making any big moves on the currency. Meanwhile, the euro is still under pressure, thanks to Italian political uncertainties.

This has left the US dollar as the dominant force in the currency market.   These trends with the euro and US dollar are likely to continue for most of the coming week, as investors anticipate the possibility of Italian populist parties attempting to formally form a government.

Due to Brexit uncertainties in Britain, and Italian political uncertainties, the pound and euro may both see limited strength, even if upcoming data impresses.

Major UK inflation and retail data this week could boost Bank of England (BoE) interest-rate hike bets and the pound, while euro trade may react to this week’s Eurozone PMI data, and next week’s Eurozone inflation projections.

It would take a lot for the US dollar to reverse its recent rally. A slew of underwhelming US data could knock the currency and give the euro a bit of breathing room, so keep an eye out on this week’s Fed news, and next week’s US growth and employment stats.

At Currencies Direct, we’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news, or how it could impact your currency transfers.

Since 1996, we’ve helped more than 210,000 customers with their currency transfers; just pop into your local Currencies Direct branch, or give us a call to find out more.

T: +34 922 971 781



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Posted by on May 25 2018. Filed under Business & Finance. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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