The euro came under further pressure against the pound yesterday, with EUR/GBP falling close to its lowest level in 3 weeks, achieving over £3,000 less on a €200,000 transfer compared to the highs seen just a week ago.

Currency Pair% Change in 1 monthDifference on £200,000
GBPEUR2.5%€5,670

One contributor to this sterling strength, which has been gaining against the euro since the start of the week, is the news that 3 Conservative MP’s have decided to leave the Tory party and join the Independent Group created by 7 former Labour MP’s, pushing the possibility of a no deal Brexit that bit further away for now. Markets took this news positively, as although this is viewed negatively for Theresa May and her Brexit negotiations, the new Independent Group is gathering momentum and this political movement has given Investor’s some confidence that the UK won’t be without a deal come the March 29th deadline.

European data has been less than impressive over the last few months, and there are many other contributors holding the value of the Euro down. Italy, the third largest economy in the Eurozone, has been classed as being in a recession, and Growth and Inflation levels are low across the whole of Europe causing the European Central Bank to rethink their plan on raising interest rates in the near future. To add to this, Spain have called elections to take place on 28th April, and the ongoing trade war with the US means that 25% tariffs could be implemented on all European cars.

Euro falls on UK Independent Group gaining momentum

Will European data continue to disappoint?

With all this in mind, all upcoming data releases will be keenly watched for by investors for signs of an improving economy.

This morning will provide a host of economic data including Markit Purchasing Managers Index (PMI), and PMI data for the Services and Manufacturing sectors, which have all been on a downward trend since the start of 2018. Although expectation is for a slight improvement in February, if this data disappoints I would expect the euro’s value to fall further as these data sets can be a good signal towards the direction of future Growth.

Inflation figures for January will be released at 10:00 tomorrow, and also has the capacity to create swings on EUR exchange rates, along with a speech by ECB President Mario Draghi at 15:00.

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