Pound V euro: GBP trades close to two-week high ahead of G20 summit
THE pound spent Thursday morning close to a two-week high of €1.141 against the euro.
With no UK data to consider today, demand for the pound remained tepid after a recent trio of PMIs fell short. These showed slight slowdowns in UK manufacturing, construction and services activity, largely attributed to all the recent political uncertainty.
On an otherwise fairly quiet day, Prime Minister Theresa May is expected to meet with Donald Trump at the G20 Summit.
The meeting of global leaders takes place over Friday and Saturday and could see May discuss UK-US trade deals for the post-Brexit period.
More concretely, May is expected to discuss the contentious issue of climate change with the US leader, specifically his plans to withdraw from the Paris climate change agreement.
Given that May seemingly had a positive reception from Trump when she visited the White House in January, it remains possible that the two national leaders will have a productive discussion during the summit.
In Eurozone news, the euro has been largely unaffected by the latest domestic data. German construction fell marginally in June, but German factory orders and Eurozone-wide retail activity both rose.
The Bank of England explains the exchange rate
This left the EUR/GBP exchange rate trading in the region of £0.878.
We also have a speech from European Central Bank (ECB) official Peter Praet to contend with, followed by ECB meeting minutes.
Speaking earlier this week Praet struck a cautious tone, stressing the need to be patient when it comes to changing economic stimulus. If this outlook is repeated, the euro may dip.
The ECB meeting minutes could be high-impact, with the euro potentially being driven lower by any pessimistic outlooks from policymakers.
GBP/EUR movement could occur on Friday following the release of the UK’s trade balance report and a spread of production figures for May.
The trade balance figure could prove the most impactful; this previously posted a deficit of -£2.05bn in April.
If May’s result shows a narrowing in the deficit the pound could advance.
Elsewhere, forecasts have been positive for construction, industrial and manufacturing output figures.
If these show growth across the board then the pound may appreciate further against the euro before the weekend.