EUR/GBP Exchange Rate Subdued on Gloomy Eurozone Economic Sentiment
The Euro Pound (EUR/GBP) exchange rate is rangebound this morning as investors react to the Eurozone’s latest sentiment figures.
At the time of writing, the EUR/GBP exchange rate is currently trade at around £0.89 virtually unchanged from the day’s opening levels.
Weak Eurozone Economic Sentiment Hangs over Euro (EUR) Exchange Rates
The Euro (EUR) is on the defensive against the Pound (GBP) and the majority of its other peers this morning as some disappointing sentiment figures cast more gloom over the Eurozone.
According to data published by the European Commission, Eurozone economic sentiment suffered another sharp drop in June, with the sentiment index tumbling from 105.2 to just 103.3, falling below the modest drop to 104.6 expected and striking a three-year low in the process.
#EuropeanCommission disappointingly & worryingly report #Eurozone #economic sentiment weakened markedly to near 3-year low in June. Index down to 103.3 (105.2 in May). Sharp fall in #manufacturing sentiment & also down for #services & #consumers. Rise in #construction & #retail
— Howard Archer (@HowardArcherUK) June 27, 2019
The slump was mostly attributed to falling confidence in some of the bloc’s largest economies, with Germany and Italy recording the largest falls this month.
The data will did little to reassure EUR investors, who are growing increasingly worried about the health of the Eurozone as it struggles under the pressure of stubbornly low inflation and weak growth.
This is also a major concern for the European Central Bank (ECB), which signalled last week that it could cut interest rates and/or pump fresh stimulus in the Eurozone if conditions do not improve, the prospect of which continues to weigh on the Euro.
Pound Sterling (GBP) Buoyed by Johnson’s Brexit Remarks
Meanwhile, the ongoing Conservative leadership contest has actually lent some strengthen to the Pound (GBP) this morning, following comments from Boris Johnson on the chances of a no-deal Brexit.
At a digital husting, Johnson, the current frontrunner to replace Theresa May as PM said that while he is fully prepared to pull the UK out of the EU without a deal in October, he believes the chances of a no-deal Brexit are almost zero.
‘It is absolutely vital that we prepare for a no-deal Brexit if we are going to get a deal. But I don’t think that is where we are going to end up – I think it is a million-to-one against – but it is vital that we prepare.’
His comments were welcomed by GBP investors who have worried that a Johnson premiership would increase the risks of no-deal, but were no enough to prompt a lasting rally in Sterling as they remain sceptical that the EU is willing to renegotiate the EU withdrawal deal.
EUR/GBP Exchange Rate Forecast: Eurozone CPI Figures in Focus
Looking ahead, the main catalyst of movement in the Euro Pound (EUR/GBP) exchange rate in the tail end of the week is likely to be the publication of the Eurozone’s latest Consumer Price Index.
Economists forecast the CPI figures will show that inflation in the bloc will have remained subdued this month, something which is likely to add pressure on the ECB to cut interest rates and leave the Euro on the defensive tomorrow.
Meanwhile, the UK will publish its final first quarter GDP reading on Friday, which are expected to confirm that the UK enjoyed healthy growth at the start of 2019, potentially lending some support to the Pound.