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Euro to Pound Sterling Exchange Rate Struggles to Advance as German Factory Data Disappoints

Euro to Pound Exchange Rate Trending Nearer Worst Levels amid Brexit Hopes

While demand for the Euro (EUR) has improved slightly this week, rising hopes for a no-deal Brexit to be avoided and for a possible soft Brexit have kept the Euro to Pound Sterling (EUR/GBP) exchange rate closer to its worst levels.

Since opening this week at the level of 0.8601, EUR/GBP has trended lower due to the mixed Eurozone economic outlook as well as rising hopes for a more market positive outcome to the Brexit process.

EUR/GBP trended closely to the level of 0.8544 at the time of writing, meaning the Pound (GBP) has recovered last week’s losses. EUR/GBP now trends within half a pence of last week’s yearly low of 0.8492.

Some stronger than expected Eurozone data in the middle of the week has made it easier for the Euro to avoid falling back to its worst levels, but the Pound’s appeal on hopes that a no-deal Brexit can be avoided are keeping it resilient.

Euro (EUR) Exchange Rates Fail to Find Support in German Factory Stats

Hopes for the Eurozone to be undergoing a rebound in economic activity are still too weak to make the Euro much more appealing, as this week’s Eurozone data has continued a trend of painting a picture of mixed gloom for the currency bloc.

One thing’s for sure though – the Eurozone’s manufacturing sector is hurting. This is making investors hesitant to bank on a strong Eurozone economic rebound, and is limiting market demand for the Euro.

This morning’s data was only the latest to make investors concerned about the Eurozone’s manufacturing sector. German factory orders from February worsened deeply from 2.1% to -4.2% rather than rebounding to the expected 0.3%.

It weighed on hopes that there had been signs of a recovery in Eurozone economic activity.

These hopes found a little support in the middle of the week as the Eurozone’s services PMIs beat expectations, but overall the continued signs of weakness in the bloc’s manufacturing sector kept the Euro unappealing.

Pound (GBP) Exchange Rates Avoids Losses on Hopes No-Deal Brexit will be Averted

The Pound has seen stronger demand this week, which has pushed EUR/GBP to shed last week’s gains. The Pound’s strength has been largely due to speculation that the UK will avoid crashing out of the EU with no deal next Friday.

The EU’s current formal Brexit date is still the 12th of April and it is currently unclear if the EU will allow another delay to the process.

Despite this, the Pound is appealing thanks to efforts from UK Parliament to prevent a no-deal Brexit from becoming reality, including a bill to prevent a no-deal Brexit that is being discussed in the House of Lords today.

While there is no certainty that the bill will succeed in being passed into law, the Pound is stronger on attempts to prevent no-deal Brexit as well as this week’s speculation that the government could compromise and offer a softer Brexit.

Still, with just over a week until the current Brexit date and a lack of solutions visible yet, the Pound found it a little harder to hold its best levels and Brexit uncertainty persisted.

Euro to Pound (EUR/GBP) Exchange Rate Investors Await Brexit Developments and German Data

Unless Friday’s German data is highly impressive or upcoming Brexit developments worsen concerns of a no-deal Brexit taking place next week, the Euro to Pound (EUR/GBP) exchange rate is likely to end this week lower.

While the Pound is a little weaker today, the Euro still lacks the drive to sustain a recovery versus the British currency due to a lack of supportive Eurozone data in recent sessions.

As a result, if tomorrow’s anticipated German industrial production stats impress investors it could help investors to become more optimistic about the possibility of a Eurozone economic recovery and this would help the Euro to rebound.

German industrial production is expected to have improved from -0.8% to 0.5% month-on-month in February.

If the data disappoints though, market attention will once again turn towards Brexit developments ahead of next week’s current Brexit date.

Investors are highly anticipating any kind of news on whether Brexit could be delayed again, as well as if talks between UK leaders will result in a potential softer solution to Brexit.