Euro Suffers Losses to a Strong US Dollar and a Resilient Pound Sterling

Neutral GBP/EUR Exchange Rate as Brexit and Global Factors in Focus

The euro hit a one-week high yesterday, trading at 1.1171 against the US dollar. This was short-lived however as the rate favoured the downside not long after. Investors are observing the shifting of the exchange rate as a break lower would increase the bearish pressure on the currency.
Recent events have favoured the USD and saw it edge back upon the euro, as the euro dropped slightly against the GBP.

USD gains means a drop for the Euro


A stronger USD in the past couple of days has seen the EUR/USD rate move lower. The DXY recovered from recent weekly lows, sitting at around 97.30. US yields are also up, with the 10-year figure at 1.81%, which gave support to the greenback. The USD strength was also bolstered by recent economic figures like the retail sales numbers which came in above expectations, favouring the decline in the EUR/USD rate.

The Euro also suffered losses to GBP. As the EUR/USD exchange rate suffers at nearly daily lows, the GBP/USD hit fresh six-day highs on Thursday which give the edge to the GBP over the Euro. But with the release of the UK’s retail sales figures coming in at below predictions, the Euro could find footing to enable it to compete with the GBP once more as pressure mounts on the Bank of England to make interest rate cuts. Recent reports however, suggest that despite the pressure mounting on the BoE, GBP is remaining resilient.

GBP claws back losses against the EUR as Euro suffers from rival strength


Reports from the last day of trading are suggesting that the pound sterling has managed to re-gain almost all of its previous Monday losses on the GBP/EUR exchange rate. This was mainly due to the euro being weakened at the mercy of a strong performing USD. The GBP/EUR rate opened the week at around 1.17, shortly after it spent most of the week trading below this level, touching lows of 1.16 for the first time this year before recovering in the latter end of the week. However, BoE uncertainties remain. A poor performance of the UK’s retail sales figures was announced just this morning with a fall of 0.6% in December. Pressure has been piled onto an already unstable BoE and investors will be worried that this may solidify the rate cut on month-end. This could give the euro some respite and allow it to claw back some losses as the GBP suffers on its poor performing data. But could the USD’s strength be too much for the euro to make any significant gains?

If you would like to learn more about what may affect the GBP/EUR or have an upcoming currency transfer, please contact me, Tom Holian, using the form below.