Euro strengthened against sterling yesterday leading to an overall gain for the trading week for the euro against the pound as UK Manufacturing data caused a GBP sell-off.
The week started off with the GBP/EUR exchange rate remaining fairly stable, however as the week progressed we started to see a lot more volatility for the currency pairing.
Eurozone Growth Forecasts Caused the Euro to Slip Aginst the Pound Mid-Week
Growth figures for the Eurozone disappointed in the middle of the week. On Thursday we saw investors and speculators further shy away from euro after European Central Bank (ECB) President Christine Lagard’s comments that the Eurozone economy may shrink by as much as 12% in what would be seen as the worst contraction ever for the bloc. On top of this, it seemed that investors were not totally comfortable at the lack of Quantitative Easing at the latest interest rate decision, however there was an introduction of new measures to support lender liquidity.
This news led to weakness for euro exchange rates against most major currencies, seeing GBP/EUR interbank exchange rates once again creep above what seems to be an unofficial level of resistance at 1.15. It does seem that the 1.15 is essentially a glass ceiling at present, sterling has flirted with breaking this figure and staying above it on a couple of occasions only to decline and find itself back down again fairly shortly afterwards.
For those looking to buy Euros with the Pound, unfortunately the same pattern emerged again and by the close of play GBP/EUR interbank exchange rates were back down to 1.136, showing a drop of over 1% on the day and just under 1% for the trading week overall.
Next week a lot of the concentration may be on what the Bank of England does at their interest rate decision, set to be released at 7am much like a number of other data releases in the past few weeks. Any fiscal changes or hints towards future changes may lead to a volatile morning for GBP/EUR exchange rates from the very start to the day, so if you have a transaction to carry out it would be worth letting your broker know on Wednesday so that they can let you know of a number of options that may help you.
Later in the day we also have an announcement from Boris Johnson, which is likely to detail the next stages for the UK lockdown, with lockdown exit strategy also being quite a market mover at present we could be looking at a rollercoaster end to a trading week for GBP/EUR exchange rates, especially as there is a Bank Holiday in the UK on Friday.
If you would like to learn more on factors influencing GBP/EUR exchange rates or have an upcoming currency transfer you can contact myself, Daniel Wright, directly using the form below.