EUR GBP Sees New Lows for the Year on BoE Moves
The EUR GBP exchange rate saw news low for the year after traders digested the Bank of England statements on Thursday. The EUR V GBP saw a new 2021 low of 0.8461 and the GDP update for the UK on Thursday could determine the next path. Tuesday sees the release of ZEW economic sentiment for the German and Eurozone economies.
The EUR to GBP rate is trying to bounce here and hold the support at the April low but the pound has momentum.
Speculation mounts over Johnson and Sunak relationship
Downing Street has commented that Boris Johnson had “no imminent plans” to reshuffle the Cabinet after rumours over the weekend said that the prime minister was considering moving chancellor Rishi Sunak to the health secretary.
Johnson was warned by Tory MPs that he risked ending his political career by demoting the chancellor, who is seen as a likely successor to lead the Conservatives.
A tory ally of Sunak told The Telegraph: “If he demotes him he’s only signing his death warrant. There’s nobody else as good as Rishi.”
Another MP said: “To lose one chancellor may be regarded as a misfortune; to lose two looks like carelessness.”
The move would be a sign of instability after Sajid Javid has only just entered the cabinet as a health secretary replacement for the disgraced Matt Hancock.
Current polling also suggests Rishi Sunak remains more popular than the Prime Minister amongst Conservative members and the UK public.
ZEW sentiment unlikely to move the needle for the euro
Today sees the latest ZEW economic sentiment figures for the German and Eurozone economies but that is unlikely to hurt the pound’s recent advance.
ZEW for the eurozone peaked in May at a yearly high of 84, but the index has dropped to 61.2. The move lower was driven by increased restrictions and a belief that the rebound had peaked after the loosening of some restrictions. The German reading also peaked in May at 84.4 and has since slumped to 63.3.
The recent trends in European data make it unlikely that the data release will move the euro currency very far and the pound should see strength into Thursday’s GDP growth figures for the June quarter.
The expectation from analysts is for a 4.8% improvement in the UK economy and the Bank of England said last week that it expects 5% growth for Q2. This will be an important reading for the UK as the bar may be set high for the quarter. A more disappointing number would take some of the wind out of sterling’s sails at the yearly highs, while a stronger number could propel the eur v gbp rate further lower, with the 2020 lows being the target.
The EUR v GBP found support at 08300 in March of 2020, before Brexit fears set in for the pound. We argued at the start of 2021 that the pound was undervalued on that basis, and it has proven to be the case.
The post EUR GBP Sees New Lows for the Year on BoE Moves appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/08/eur-gbp-sees-new-lows-for-the-year-on-boe-moves/
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