Liam Fox’s No-Deal Brexit Statement Forces Rise in Euro Pound (EUR/GBP) Exchange Rate
The Euro Pound (EUR/GBP) exchange rate rose on Monday morning following claims made in the Sunday Times by UK International Trade Secretary Liam Fox, in which he stated that the prospect of the UK crashing out of the EU is looking increasingly likely.
This forced a sizeable drop in the value of the Pound, particularly as Fox had previously asserted that the UK’s exit from the EU would be ‘the easiest thing in human history’.
This about-face, which now sees the odds of a no-deal Brexit at 60/40, alarmed GBP investors and weakened Sterling against its major peers.
UK Prime Minister Theresa May was quick to rebuke Fox’s statement and talk down the likelihood of a no-deal Brexit, but this didn’t at all revive investor confidence in GBP.
Euro (EUR) Exchange Rates Firm Following German Trade Data
Despite the hiccup in Germany’s industrial data yesterday, which saw a drop of 4% in factory orders for June, Euro (EUR) exchange rates are relatively stable today following the country’s latest trade data.
The Eurozone’s largest economy published its balance of trade for June this morning, which saw a sizeable increase in its trade surplus.
This gave the Euro a head start this morning, helping it to trade narrowly against most major currencies.
Pound (GBP) Exchange Rates at Mercy of Brexit Developments
The Pound (GBP) exchange rate may be unstable for much of this week due to a lack of new UK data and broad uncertainty surrounding Brexit.
The UK is officially slated to leave the EU in March 2019 and analysts are predicting that Sterling will see some volatile movement over the coming months as Prime Minister Theresa May scrambles to save her Chequers plan, and prominent Brexiteers continue to express their doubts.
May recently had informal talks with France’s President Emmanuel Macron, in which she attempted to sway him in favour of her Brexit designs, but speculation remains that Macron will not abandon his doubts about the flailing Chequers plan.
Euro Pound (EUR/GBP) Exchange Rate Forecast: Lull in Data Brings Brexit to the Fore
Euro Pound (EUR/GBP) investors will be keenly analysing this week’s Brexit developments, with no noteworthy data for either the Eurozone or the UK due for release until Thursday.
The exchange rate may see only minor fluctuations before then, barring any major Brexit developments, but the Pound may be the worse off in the pairing following fallout from Fox’s statements on Sunday.
Thursday morning will bring with it the European Central Bank’s (ECB) Economic Bulletin, which analysts will be watching closely, but conflicting indications of healthy PMI’s and disappointing GDP growth could cast doubt over the direction of EUR movement on the day.
Friday will see the publication of the UK’s GDP growth rate for the second quarter, which economists are forecasting to have increased to 0.4%.
This may see GBP exchange rates gain traction, although advances will be limited should Brexit speculation continue.