The Euro has managed to reverse its fortunes on the afternoon of 19th February, resulting in a minor EUR/GBP exchange rate rise.
This appreciation follows a warning from former Cabinet Minister Damian Green, about Brexit.
Discussing the UK’s stance on the exit process (and weakening the Pound in the process), Mr Green has said;
‘We can all argue about economic forecasts and none of them are 100% accurate, but you have to some extent rely on them and if you reject evidence you don’t like, then you are likely to end up producing faith based policies’.
(First published 19th February, 2018)
Major Decline in Eurozone Construction Growth Weakens EUR/GBP Exchange Rate
The Euro to Pound (EUR/GBP) exchange rate has risen marginally on 19th February, but remains constrained by a negative reaction to Eurozone construction data.
It has been reported that Eurozone construction output slowed from 2.9% in November to 0.5% in December last year.
This has been the slowest pace of growth in the sector since January 2017, when a decline of -5.6% was reported.
While slowing construction activity is not an immediate concern, it could cause Euro losses in the future if Eurozone construction PMIs fall because of this result.
Plans for Agricultural Brexit Fund Keep GBP/EUR Exchange Rate Tight
While the Pound has made minor losses against the Euro today, it remains close in the GBP/EUR currency pairing.
This is partly down to news that MPs are rallying around the idea of a post-Brexit fund for UK farmers.
UK farming activity has long been supported by generous EU subsidies, but there are concerns about what the situation when this funding is withdrawn after Brexit.
The fact that MPs are taking a pre-emptive approach on the matter has mitigated other damage to the Pound today, preventing an outright GBP/EUR crash.
Pound to Euro Losses Triggered by Verhofstadt’s Objection to EU Citizens Deal
One reason for today’s Pound to Euro (GBP/EUR) losses has been European Parliament MEP Guy Verhofstadt, who has criticised UK immigration plans.
Mr Verhofstadt has warned that the UK is aiming for the unacceptable with its plans for EU citizens, stating that;
‘It’s not acceptable for us that rules will continue without change for financial services, for goods, for whatever other business, and only for the citizens, their situation will change.
That is penalising citizens. For us that is not acceptable. We do not even want to be talking about it’.
Mr Verhofstadt was discussing plans to reduce the rights of EU citizens coming to the UK during the transitional period, as a lead-in to full post-Brexit conditions.
Euro to Pound Exchange Rate Forecast: EUR/GBP Volatility possible on Bundesbank Report
There could be fluctuations in the Euro to Pound exchange rate today, when Germany’s central bank releases its monthly report.
The Bundesbank document could provide an assessment of the German economy at present, in addition to offering a forecast for future economic movement.
Germany is the largest individual economy in the Eurozone, so traders are naturally anxious to see signs of continued strength for the German economic machine.
The Euro may also be affected by a Eurogroup meeting later today, during which ministers will discuss the Greek economy and a possible banking union.
Greece’s debt issues have been out of the headlines recently, but any signs of continued trouble could lower confidence in the Eurozone and weaken the Euro.
The GBP/EUR exchange rate could be affected by a speech later this afternoon, from Bank of England (BoE) Governor Mark Carney.
Mr Carney will be discussing ‘Leadership and Values’ in London, but this doesn’t rule out the Governor making statements about future UK monetary policy.