Best Pound To Euro Exchange Rate Slips From GBP EUR Investors As UK Borrowing Worse-than-Expected

Published: 20 Oct 2017 21:24 Currency Markets Forex

Pound to Euro exchange rate forecast

The British pound sterling to euro rate (GBP/EUR) climbed after Post-‘Brexit’ UK Retail Sales beats market expectations.

  • The Pound to Euro exchange rate today: 1 GBP = 1.15452 EUR.
  • The Pound to Dollar exchange rate today: 1.30751 USD
  • The Euro to Pound Sterling exchange rate today: 1 EUR = 0.86616 GBP.

Even though the UK’s Public Sector Net Borrowing showed a surplus of 1.47 million in July this failed to keep the GBP/EUR, GBP/USD rates on a bullish trend on Friday morning.

Forecasts had been for a slightly larger surplus, discouraging investors as the ultimate impact of the Brexit vote on the domestic economy remains to be seen.

As reported by the Belfast Telegraph, "The surplus in July of £1bn was worse than the £1.6bn City of London analysts had expected and leaves the 2016-17 deficit on course for an £11bn plus overshoot of the Office for Budget Responsibility's March target."

The Euro was able to beat GBP/EUR down slightly from its best levels this week on Thursday afternoon, thanks to mixed Eurozone inflation data printing 0.2% year-to-year inflation and a cautiously optimistic tone from the European Central Bank’s (ECB) latest minutes.

In the account of its July 20-21 policy meeting, the ECB felt the need to reassure markets that Britain’s ">EU Referendum was unlikely to affect the Eurozone’s recovery. Officials were in agreement that there should not be unnecessary speculation about further ECB stimulus.

Despite recent news of airport currency exchange brokers offering below 1.00, the Pound Euro (GBP/EUR) exchange rate pushed towards its best weekly level on Thursday, having seen lows near 1.14 and highs near 1.1550.

Shortly after the release of the UK’s July retail sales figures, GBP/EUR, GBP/USD rallied higher on the day.

Perhaps unsurprisingly the European Central Bank (ECB) appeared on track to maintain its ‘wait and see’ approach, with the tone of the latest monetary policy meeting account indicating a more neutral outlook.

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As a result the appeal of the Euro improved somewhat, although the risk-on mood of markets continued to weigh on the single currency

Sterling has managed a startling recovery since striking new lows this week, with new best rates of 1.16 against the Euro and 1.31 against the US Dollar being seen.

The source of this currently high level of optimism has been July’s retail sales result, which has seen significant rises take place on the month and the year for the base figure and that excluding fuel sales.

While this is undeniably a sign of strong sales after the EU Referendum, it is worth remembering that as July was a summer month, the bias of tourist spending and a weaker Pound may have skewed the data somewhat.

GBP to EUR exchange rate chart

Latest Pound/Euro Exchange Rates

On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1

The pound conversion rate (against pound) is quoted at 1 GBP/GBP.

The live inter-bank GBP-USD spot rate is quoted as 1.262 today.

Today finds the pound to australian dollar spot exchange rate priced at 1.939.

NB: the forex rates mentioned above, revised as of 29th Mar 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.

British Pound (GBP) Rises vs Euro (EUR) and US Dollar USD) but Markets Wary as Borrowing Stats and CBI Data Ahead

With the biggest UK economic announcements of the week now come and gone, it remains for tomorrow’s public sector net borrowing result for July to trigger the last GBP movement before trading closes for the weekend.

Forecasts have been somewhat optimistic for the outcome, with the expected borrowed amount of 3.3bn being a step down from the previous 7.31bn figure.

Looking ahead to next week, the Pound is likely to be moved on Tuesday by decline-predicted Confederation of British Industry (CBI) August industrial trends for orders, as well as a previously negative distributive trades result for August on Thursday.

euro to pound sterling exchange rate chart

Euro (EUR) Exchange Rates Unsettled after Eurozone Inflation and Construction Output Results

The value of the Euro has been fluctuating wildly on Thursday, with a gain of 0.6% against the Japanese Yen being offset by a loss of -0.8% against the Pound.

Eurozone data out recently has focused on the currency bloc-wide inflation rate for July, as well as June’s current account and construction output stats.

The latter two printings have both risen healthily, but while July’s annual base inflation rate has risen from 0.1% to 0.2%, the monthly figure has dropped from 0.2% to -0.6%.

Incoming Eurozone data likely to affect single currency – ECB Accounts, Spanish Trade and German PPI

The next Eurozone results to watch out for are actually due shortly, with the European Central Bank (ECB) monetary policy meeting accounts expected to arrive in the early afternoon.

Economists will be scouting the accounts for any signs of policy action to be taken in September, while looking further ahead to Friday, the day will open with pessimistically-predicted German PPI results for July.

Also expected over Friday morning will be Spain’s trade balance for June; this has a deficit expansion from -0.94bn to -2.6bn forecast.

Could the GBP/EUR Exchange Rate Tumble in the Future? Pantheon Macroeconomics Economist Warns Caution on Retail Sales Optimism

While economists and investors in the Pound alike have been inspired by the forecast-beating UK retail sales results, Pantheon Macroeconomics Chief UK Economist Samuel Tombs has issued words of caution, stating;

‘July’s retail sales figures show that consumers have been protected from the immediate fallout of the ‘Brexit’ vote, but with firms intending to stop hiring and inflation set to soar, the high street is set for a tough year’.

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