EUR/GBP Exchange Rate Extends Gains as ‘No-deal’ Brexit Spooks Markets
The Euro Pound (EUR/GBP) exchange rate is sitting at a nine-month high this morning as markets remain jittery on fears that the UK is hurtling towards a ‘no-deal’ Brexit.
At the time of writing, the EUR/GBP exchange rate is down 0.2% from its opening levels today and appears on track to break through the £0.90 barrier.
Pound Sterling (GBP) Exchange Rate Falters as ‘No-deal’ Brexit Fears Hang Over Currency
The Pound (GBP) continues to flounder this morning as markets remain jittery over the prospect of a ‘no-deal’ Brexit.
A recent flurry of headlines have suggested that talks between the UK and the EU over their future relationship have largely stalled, driving the GBP exchange rate lower as the two sides remain at odds over a number of key issues.
The main point of contention currently appears to be the UK-EU customs agreement, with the EU’s chief negotiator, Michel Barnier rejected the proposals outlined in Theresa May’s Brexit White paper.
It is a little over six-months until the UK is set to formally leave the EU and analysts are already speculating that the Pound could lose up to 10% of its value in the event of a ‘no-deal’ Brexit, something which is understandably spooking markets.
Ned Rumpeltin, European head of foreign-exchange strategy at Toronto-Dominion Bank suggests:
‘[In EUR/GBP] a move above 0.9250 would be consistent with a scenario where the markets were seriously considering the possibility of the U.K. crashing out without a deal.’
Euro (EUR) Exchange Rate Buoyed by Pause in the US Dollar (USD)
The Euro (EUR) meanwhile is finding support this morning from a sudden pause in the US Dollar (USD) exchange rate.
After rocketing higher in recent weeks the ‘Greenback’s advance appears to have met some resistance in the last couple of days, with observers suggesting that it may have been hit by a bout of profit taking.
With EUR/USD being the most traded currency pairing in the world, the pause in the US Dollar has seen investors look to the Euro for further gains.
EUR/GBP Exchange Rate Forecast: Will the UK’s GDP Figures Prompt a Rally in Sterling?
Looking ahead, the Euro Pound (EUR/GBP) exchange rate may begin to retreat at the end of the week as the UK publishes its latest GDP figures.
The first estimate of GDP for the second quarter is forecast to show growth accelerated to 0.4%, up from 0.2% at the start of the year.
On top of this the publication of June’s industrial figures may also prove positive for the Pound on Friday, as analysts predict a rebound in UK factory output.
In the meantime, a lull in notable Eurozone data could see the Euro struggle to maintain its momentum into the second half of the week, especially if a possible rally in the US Dollar (USD) heaps on pressure once more.