The Pound Sterling started the week in a softer manner, dropping lower against the Euro and other major currencies. However, reports are suggesting that the GBP/EUR exchange rate is still receiving a sufficient amount of support on the charts and thus the weakness of the GBP should be short-lived. But with the UK facing a number of economic releases this week, there could be tests ahead for the Sterling’s resilience. Meanwhile, the Euro is taking cues from the ECB’s minutes, alongside Lagarde and other global factors as it looks to close the gap between the GBP/EUR exchange rate.
GBP/EUR Rate Volatile but in Favour of the Pound
Last week saw the GBP/EUR exchange rate finish trading with a GBP gain, this came after the currency showed its resilience against the EUR in a week that was dominated by rising global tensions between the US and Iran. Price action is one of the major factors that kept the GBP on an upward trend on the charts, but gains were limited as the Bank of England (BoE) governor Mark Carney made dovish comments about the bank which saw the GBP tumble. As it stands the GBP/EUR is favouring the upside, but with key economic data released this week, the Pound will be tested.
EUR/GBP Stuck in 5-Month Downtrend but Investors Hope for Positive Economic Data Releases This Week
Meanwhile, the Euro is trying to close the gap on the GBP after a poor week of trading last week which saw the EUR drop against the GBP and the USD, despite a few positive economic releases. The EUR/GBP has attempted to recover but sees itself stuck in a 5-month downtrend at 0.8561 and a 55-day ma at 0.8534, according to Karen Jones at Commerzbank.
This Wednesday will see the release of the November industrial production figures for the Eurozone and markets are expecting the output to have rose by 0.3%. If this is the case, there may be a chance to partly reverse a -0.5% decline that was seen in October. Furthermore, meetings from the European Central Bank (ECB) will be released on Thursday at 12:45, followed by the bank’s chief, Christine Lagarde who will speak later that day at 18:00. Both interactions from the ECB will be crucial for the Euro. Lagarde’s speech is set to address the ‘strategic review’ that was mentioned by the ECB in December concerning its ongoing policy response to challenges faced by the Eurozone.
Markets will be keen to observe the comments made by the bank’s chief, and what it could mean for the Euro looking ahead.
If you would like to learn more about factors influencing GBP/EUR exchange rates for an upcoming currency transfer, feel free to contact myself, Jonathan Watson, using the form below.