EUR/GBP Exchange Rate Muted as Cross-Party Brexit Talks Remain Deadlocked
The Euro Pound (EUR/GBP) exchange rate was left flat at the start of this week’s session, as investors remained wary of the pairing amidst speculation that cross-party Brexit talks in the UK may collapse this week.
At the time of writing, the EUR/GBP exchange rate is virtually unchanged from today’s opening levels, leaving the pairing trading at £0.86.
Cross-Party Talks Weigh on Pound Sterling (GBP) Exchange Rates
The Pound (GBP) is rangebound against the Euro (EUR) today, with the pairing holding just above a two-week low as markets express concern over the current state of the cross-party Brexit talks.
Despite weeks of negotiations, so far there has been no real signs of progress in the talks between the government and Labour, something that has frustrated many GBP investors.
Stoking further concerns that the talks will ultimately end without a deal being agreed, were recent remarks from shadow Brexit secretary Sir Keir Starmer.
Starmer told the Guardian that Theresa May continued to refuse to budge on a number of her so-called red lines, and that Labour was ready to end the talks as early as this week if this situation does not change soon.
Euro (EUR) Exchange Rates Flat as Eurozone Risks Remain
Meanwhile, the Euro (EUR) is also stuck in a narrow range at the start of this week’s session as analysts warn of some of the risks currently facing the Eurozone.
Analysts at ING warn that movement in the single currency may struggle to find momentum in the come weeks, amid concerns over the impact of renewed global trade tensions and a possible shift toward populist parties in the upcoming EU elections.
Chris Turner, Head of FX Strategy at ING suggests:
‘The renewed trade conflict risks stamping on the green shoots of the Eurozone recovery. US tariffs on auto imports and European elections pose two further risks to the euro in May.’
‘A good showing from Salvini’s League in European elections end month also raises the risk of new Italian elections later this year.’
EUR/GBP Exchange Rate Forecast: Solid German GDP to Boost the Euro?
Looking ahead, the main catalyst of movement in the Euro Pound (EUR/GBP) exchange rate in the first half of this week looks set to be the publication of Germany’s preliminary GDP figures on Wednesday.
This could see the Euro punch higher in the mid-week if growth in the Eurozone’s largest economy is shown to have rebounded in the first quarter of 2019 after stagnating at the end of 2018.
In the meantime, GBP investors will be focused on the publication of the UK’s latest employment figures on Tuesday.
Economists forecast that the report will show that while employment growth remained robust in March, it won’t be enough to push the UK’s unemployment rate lower.
Instead it’s likely to be the accompanying earnings figures that will be in the spotlight for GBP investors this week, with the Pound potentially losing ground if the recent uptrend in wage growth failed to carry through to the end of the first quarter.