Wednesday, 19 July 2017

Outlook for Sterling/Euro

As I mentioned in yesterday's post, GBP/EUR rates have settled at €1.13, falling due to the softer inflation numbers which in turn mean it's unlikely that interest rates will rise this year.

In today's post I'll look at the key events in the next few days that could affect Sterling/Euro rates.

UK Retail Sales figures


These are due to be released on Thursday at 09:30am and are forecast to show a 0.4% rise. Consumer spending has been surprisingly robust over the last year and it will be interesting to see if the number is above the forecast. If so, expect the Pound to rise against the Euro. If the number disappoints then it's likely to send GBP/EUR down into the €1.12's.

ECB Policy statement


Tomorrow at 12:45pm the European Central Bank (ECB) announce their interest rate decision, and it's widely expected they will leave rates where they are at 0%. What could move rates however, is the press conference and policy statement due at 13:30pm. There has been talk recently of the ECB scaling back their stimulus programme (Quantitative Easing) and if they give further hints that they intend to do so, the Euro is likely to gain strength and become more expensive, sending Pound/Euro lower. However, if they don't hint at this and instead say that they will continue with current measures moving forwards, then this could weaken the Euro and push GBP/EUR back towards €1.14. Whatever happens, I think it's likely to move the rate away from it's current range.

Brexit negotiations statement


Tomorrow marks the end of the 4th and final day of the second round of Brexit negotiations. This could come to nothing, but they might give some sort of press conference highlighting what they discussed, and any successes or disagreements. Simply put, if anything comes out that indicates the talks are going well and that significant progress has been made, then I think this will be positive for the Pound. If however they are still bickering about the initial issues of rights of UK and EU nationals without having made progress, then this will probably send the Pound lower.

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