GBP/EUR + EUR/GBP Weekly Market Report 12th - 15th

Good afternoon everyone,

 

On Friday news broke that Conservative member and Brexiteer Jo Johnson had resigned over Theresa May’s Brexit plans. On top of this we had further news over the weekend that talks with Brussels broke down over the PM's solution to the Irish backstop.  The key Brexit proposal that appears to have been turned down had been to create an independent mechanism to oversee how the UK may leave a temporary customs arrangement if Brexit talks did break down, but it seems that over the weekend EU officials rocked number 10 by rejecting it.

The week ahead

With regards to economic data this week, although it is not quite having the same impact due the markets focus on Brexit updates, we do have unemployment data out for the UK tomorrow which is followed by UK inflation data on Wednesday. We also have European growth and unemployment data. One other release to note will be the Italian budget. This is due to be resubmitted to the EU tomorrow with the EU expected to review it by Wednesday 21st November. The Italian budget submitted last month fell outside of EU guidelines which investors/traders will be watching for any news on this. Last time around the negativity surrounding it did lead to Euro weakness.

GBP/EUR & EUR/GBP Weekly Movements

The next 48 hours could be extremely volatile for the GBP/EUR exchange rate with Brexit updates coming at any time. Positive progress may push the Pound back up again, but any further uncertainty or further problems for Theresa May could see the rate drop well in the low €1.13's. Important economic data is due for release this week but market reaction could be limited as most focus will be on Brexit updates.

With market sentiment for GBP/EUR rate on a sideway/downward trend at time of writing - Current key trading level is now around the €1.1380’s. If we see the rate move Lower than this level for a sustained amount of time, then the likelihood of the rate moving into the €1.12’s will be high. There is still a small chance of a November Summit going ahead but PM May will need some progress this week to make sure she has enough time for the summit to happen at the end of this month.  

Low Risk takers with pending exchanges that need to be made this week, should consider making their exchange sooner rather than later.  Sentiment towards a deal been done in time for Novembers Summit are fading and I would expect this to be the tone throughout the week.

Medium Risk takers with pending exchanges that need to be made this week, should be mindful of the negative sentiment now hanging over Brexit negotiations. This week’s economic data does have the potential to change the BoE’s mindset on when Interest rates could move higher again, although the BoE has stated on a number of occasions that this won’t happen until after Brexit (March 2019) regardless of the economic data released over the next few months. If I was a Low/Medium risk taker I would be looking to make my exchange before tomorrow’s data however if I was a Medium/High risk taker than I would be tempted to hold on to see how the GBP/EUR rates preforms today and if the rate stays in the €1.14’s then hold on until tomorrow mornings data.

High Risk takers with pending exchanges that need to be made this week, should consider waiting until Wednesdays economic data which some analysts are forecasting it could be positive for the GBP/EUR rate. Analysts are also forecasting weak data for the Euro zone on the same day so could see a double positive data result for the GBP/EUR exchange rate.

 

Key Economic Data and Events

Tuesday, November 13th

07:00     EUR German Consumer Price Index (OCT)

09:30     GBP UK Employment data (OCT)

10:00     EUR German ZEW Survey Current Situation (NOV)

10:00     EUR German ZEW Survey Expectations (NOV)

10:00     EUR Euro-Zone ZEW Survey (Economic Sentiment) (NOV)

Wednesday, November 14th

07:00     EUR German Gross Domestic Product

09:30     GBP Consumer Inflation Data

09:30     GBP House Price Index

10:00     EUR Euro-Zone Industrial Production

10:00     EUR Euro-Zone Gross Domestic Product

10:00     EUR Euro-Zone Employment Data

Thursday, November 15th

09:30     GBP Retail Sales Ex Auto Fuel (OCT)                       

Friday, November 16th

08:30     EUR ECB President Draghi Speaks in Frankfurt

10:00     EUR Euro-Zone Inflation Data

Red = Major market effect, Orange = Medium market effect & Green = little market effect.

GBP/EUR Daily Performance

  • High of the day so far is €1.1431
  • Low of the day so far is €1.1391
  • Resistance at €1.1480’s
  • Support at €1.1380’s
  • Trading Range €1.1330’s - €1.1480’s

Current rate at time of writing 12:12pm is €1.1425

 

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