Euro to Pound Exchange Rate Rises as Brexit Process Raises More Questions than Answers
After sliding in recent sessions, the Euro to Pound Sterling (EUR/GBP) exchange rate recovered most of its weekly losses this morning as fresh Brexit uncertainties and concerns over the future of Britain’s government piled up.
Last week saw EUR/GBP gain slightly, but since opening this week at the level of 0.8555, the pair has largely trended below the week’s opening levels due to Brexit hopes and weak Eurozone data.
EUR/GBP even briefly touched on a fresh low of 0.8487 last night, which was the worst level for the pair for over a year, before rebounding and trending closer to the week’s opening levels at the time of writing.
Despite trending relatively closely to its worst levels, both the Euro (EUR) and Pound (GBP) have been generally unappealing this week. Concerning Eurozone data is weighing on the Euro, while the Pound is dragged by revived no-deal Brexit fears and general Brexit uncertainty.
Euro (EUR) Exchange Rate Recovery Limited as Eurozone Confidence Stats Fall Short
Investors bought the Euro slightly versus the weak Pound today, but the Euro to Pound exchange rate’s recovery from its worst levels was limited as the Eurozone’s latest data continued to paint a gloomy picture for the bloc’s economic activity.
March’s final Eurozone confidence figures were published, and most notable prints came in lower than analysts expected.
The Eurozone’s key business confidence figure was forecast to slip to 0.66, but instead fell to just 0.53. Services sentiment, economic sentiment and industrial sentiment prints also all fell short of expectations.
This marked the ninth month in a row that the Eurozone’s economic confidence had fallen, and worsened concerns that the global economic slowdown was having a bigger than expected impact on the Eurozone.
However, despite these concerning figures and the week’s other mixed Eurozone data, the Euro was able to hold a modest recovery versus an unappealing Pound.
Pound (GBP) Exchange Rates Sliding on Brexit Deadlocks and UK Government Uncertainty
In the first half of the week, investors found the Pound a little more appealing amid hopes that UK Parliament’s ‘indicative votes’ would point towards a direction for the Brexit process to head in.
However, uncertainty and market concern regarding Brexit only deepened overnight as yesterday’s first round of ‘indicative votes’ resulted in a every proposed amendment being voted down.
On top of this, overall UK political uncertainty deepened as well as Prime Minister Theresa May announced that she would step down as Prime Minister if her Brexit deal goes through.
This was done to bolster her deal’s popularity among Conservative Party critics in the hopes that it would help the deal to pass.
There is still no certainty that the deal will succeed though, or that a third meaningful vote will even go ahead at all.
As a result, with just over two weeks until the currency formal Brexit date of 12th of April, uncertainty over the process and the stability of Britain’s government is only worsening and keeping the Pound from advancing despite hopes that no-deal Brexit can be avoided.
Euro to Pound (EUR/GBP) Exchange Rate Recovery Could Improve if Eurozone Stats Impress
While the Pound’s weakness is the main reason for Euro to Pound exchange rate gains today, the pair may climb higher if upcoming Eurozone data gives investors more reason to buy the shared currency.
Friday will see the publication of some of this week’s most influential Eurozone ecostats, including Germany’s February retail sales and March unemployment rate.
French inflation data will also be published.
If these stats impress investors, the Euro could end the week with stronger support and sustain some gains versus an unappealing Pound.
Pound investors, on the other hand, are likely to pay close attention to the day’s Brexit developments, as well as plans for how the Brexit process may continue to unfold next week.
If the government is able to put its Brexit plan to another meaningful vote of some kind and the deal is able to pass, soft Brexit hopes would rise and the Euro to Pound (EUR/GBP) exchange rate would tumble again.