The GBPEUR Exchange Rate Likely to Remain Under Pressure

The GBPEUR exchange rate has been tumbling at a strong pace since U.K. decided to leave the European Union. The pound exchange rate to Euro dipped from 1.42 in late 2015 to 1.09 at present, driven by the Brexit talks and the volatility in U.K. markets. Political instability in the United Kingdom has also been adding to the decline in GBP exchange rate.

GBP to EUR exchange rate dipped sharply following an unsupportive business data, continued scepticism regarding the UK’s Brexit negotiations and mixed retail sales report. UK retail sales surged by 1.3% Y/Y in July, declined from 2.8% last month and below the 1.4% consensus.  A few analysts blamed wet climate in the last month for lower than expected growth in retail sales.

On the other hand, the strengthening European economy has also provided a robust support to Euro exchange rate in the last couple of months, resulting in a strong pressure on GBP/EUR pair. During the latest trading session, euro currency rate move sharply higher following Eurozone’s annual construction figure increased to 2.7% Y/Y to 3.4%, significantly higher from the consensus estimate of 2.5%.

The UK borrowing figures could bring about a rally for Sterling exchange rate in the event that they uncover a contracting shortage, as they at present conjecture, yet this could be turned around later into the week with the UK’s GDP details. Overall, the GBP exchange rate is likely to remain under pressure in the short-term.

Analysts at Lloyds Bank also expect a steady growth in the EUR/GBP rate in the short-term. The bank said, “Still no change, with the current bull trend intact, despite traditional technical warning signs of a pullback. As we have highlighted, a break of support, which lies at 0.9075 today, is needed to confirm that process is underway with 0.8955 more important lower support. While over, we can see a test of key resistance in the 0.9175/80 region, but we suggest real caution at this area. A clear