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Euro to Pound Sterling Exchange Rate Holds Solid Recovery as Brexit Fears Return

Euro to Pound Exchange Rate Investors Anticipate Key Friday Data

While the Euro to Pound Sterling (EUR/GBP) exchange rate has been unable to recover all of last week’s influential losses, the pair has still seen solid gains this week so far as Brexit fears return and the Euro is supported by signs of strength in Eurozone data

Last week saw a huge EUR/GBP drop of over a pence, from the level of 0.8640 to 0.8516.

At the beginning of this week, EUR/GBP briefly touched on a fresh yearly low of 0.8474 before rebounding, and at the time of writing the pair was trending more closely to the level of 0.8605 again.

Essentially, the Euro to Pound exchange rate is gradually retracing the losses it saw last week, though the Euro’s limited strength means it has been unable to regain all of them.

On top of this, investors are hesitant to sell the Pound (GBP) too far without a more solid reason, as investors wait for cross-party Brexit negotiations to either conclude or collapse.

Euro (EUR) Exchange Rate Strength Limited by Rival Movement

Demand for the Euro has been supported by Eurozone data this week, as well as weakness in the shared currency’s rivals.

For most of the week, investors have been buying the Euro as the Pound slumps, and as the US Dollar (USD) is weighed down by signs of weakness in US data and US-China trade hopes.

This made it easier for the Euro to put in strong gains when Germany’s March industrial production report beat expectations yesterday. The data avoided a predicted contraction, bolstering hopes that Germany’s economy also performed better than expected in Q1.

However, due to the Euro’s movement in reaction to rivals like the US Dollar (USD), a stronger US Dollar since yesterday has meant the Euro’s gains have steadied.

US-China trade tensions appeared to take a turn for the worse ahead of this week’s round of negotiations, bolstering market demand for the US Dollar as a safe haven. The US Dollar and Euro often see a negative correlation, so this weakened the Euro.

Pound (GBP) Exchange Rates Tumble as Cross-Party Brexit Talks See Increased Doubt

Last week saw the Pound surge, as UK officials showed fresh signs of confidence that ongoing cross-party Brexit talks could lead to some kind of resolution.

However, these hopes were ultimately short-lived, as the tones of officials have shifted to become more doubtful this week.

As Britain’s ruling Conservative Party announced that Britain would definitely be taking part in this month’s EU elections, analysts expect that the opposition Labour Party will begin to prioritise EU elections over the cross-party talks.

With concerns now rising that the talks could collapse and leave the Brexit process in uncertainty, as well as fears that Britain’s major parties will suffer heavy defeat in the EU elections due to Brexit uncertainties, the Pound has tumbled.

Euro to Pound (EUR/GBP) Exchange Rate Could Strengthen Further if German Trade Impresses

With US-China trade tensions worsening again, markets are anxious about how the health of global trade. As a result of this and lasting uncertainty about Germany’s economic outlook, tomorrow’s German trade balance could be highly influential.

On top of German trade data, investors will be watching France’s March industrial production stats.

A slew of typically influential UK ecostats will come in tomorrow as well, but amid the broad Brexit uncertainty the Pound’s movement is more likely to be driven by Brexit news than data.

Investors will be focused on how cross-party Brexit negotiations unfold, and the Pound could be in for further losses if talks completely collapse without any progress having been made.

The Euro to Pound (EUR/GBP) exchange rate is likely to trend with a relatively bullish bias as Euro investors anticipate upcoming notable Eurozone data and Brexit uncertainties return to hit the Pound.