The Pound Euro (GBP/EUR) and Pound US Dollar (GBP/USD) exchange rates sat in a tight range on Monday as Chancellor of the Exchequer Phillip Hammond revealed the latest budget. GBP/USD was trading around 0.07% lower, while the GBP/EUR exchange rate was 0.09% higher.
German and Italian Politics Weigh on Euro (EUR) Exchange Rate
Meanwhile, the Euro had its own problems. German Chancellor Angela Merkel announced she wouldn’t be standing for re-election as the Chair of her Christian Democratic Union (CDU) party in December, and will not run for another term as Chancellor once her mandate expires in 2021. Merkel has dominated European politics for over a decade as the most powerful politician in the Eurozone powerhouse, Germany. Markets will now watch the race between party members to become the top dog. Three potential successors have already put their hat in the ring, meaning tensions in Germany could heat up sooner rather than later.
Also putting pressure on the Euro exchange rate is the situation in Italy with the latest budget – while the two sides go head to head, political uncertainty is rife.
Hammond’s Budget talk of the Day for Pound Sterling (GBP) Investors
In the UK, Phillip Hammon’s budget is the talk of the day. Theresa May has undermined Hammond’s earlier claims that there would need to be an emergency budget created should the UK experience a no-deal Brexit. May instead slapped down the claims, insisting that the entire spending commitments within the budget would be funded, regardless of the Brexit outcome.
In terms of economic data, investors will be looking towards a raft of Eurozone figures out on Tuesday which could impact the EUR/GBP exchange rate. German labour market, Italian growth, and Eurozone growth numbers will all reach markets on Tuesday morning which could provide significant influence for the Euro exchange rate.
Meanwhile, investors in the Pound will be waiting for Thursday’s Bank of England (BoE) interest rate decision. The central bank is unlikely to hike interest rates, but the follow-up press conference with BoE Chief Mark Carney is the event likely to turn heads. Any comments from the central banker could prove pivotal for the Pound exchange rate during Thursday’s trading and offer GBP/EUR and GBP/USD a reason to move.
Friday’s Non-Farm Payrolls Influential for US Dollar (USD) Exchange Rate
Friday will likely be a big day for the US Dollar when the US Change in Non-Farm Payrolls stat comes to light. Last month’s figure was disappointing, so investors will be watching the release to see if the previous month will be positively revised or if the new figure will meet forecasts.
The Pound to Euro (GBP/EUR) exchange rate is trading in the region of 1.2806. The Pound to US Dollar (GBP/USD) exchange rate is trending in the region of 1.1253.