Euro to Pound Exchange Rate Climbing despite Continued German Recession Fears
Another brief rise in Brexit hopes yesterday was not enough to help the Pound (GBP) to continue the rebound seen at the beginning of the week, and the Euro to Pound Sterling (EUR/GBP) exchange rate has been advancing since yesterday.
Unless the Pound finds some more solid support later in the week, EUR/GBP could sustain last week’s gains despite the Euro’s (EUR) own broad weakness.
Last week saw EUR/GBP climb from 0.8835 to 0.8902, and at the time of writing today EUR/GBP had recovered from Monday’s slip and was trending close to the week’s opening levels again.
Still, EUR/GBP was unable to hold yesterday’s half-month-high of 0.8931.
With the Euro weak on global growth fears and the Pound weak on Brexit jitters, the pair’s movement is volatile and limited.
Euro (EUR) Exchange Rate Appeal Limited as German Recession Fears Persist
The Euro has not had much in the way of notable support this week, with the Eurozone’s data, especially from Germany, continuing to point towards an extended period of economic slowdown.
As a result, the Euro’s strength against the Pound and other rivals since yesterday has simply been due to weakness in those rivals.
As the Pound is weighed by persisting no-deal Brexit fears, the US Dollar (USD) was weakened by yesterday’s worst US manufacturing PMI in over a decade.
Yesterday’s German and Eurozone manufacturing PMIs were slightly less awful than forecast, but it was weakness in rival currencies that has benefitted the Euro most over the past session.
Pound (GBP) Exchange Rates Fail to Find Support in Latest Brexit Speculation
Yesterday, the Pound was briefly resilient amid speculation that the UK government would soon unveil its proposals for alternatives to the controversial Irish backstop issue.
However, throughout the day, analysts expressed doubt that the government would suggest anything that would impress EU negotiators.
As details of the proposals continue to trickle out, analysts are increasingly doubtful that it will be enough to sway the EU and lead to a softer Brexit.
UK Prime Minister Boris Johnson has indicated that if the EU refuses to work with his proposals, he will instead press ahead with a no-deal Brexit. According to Connor Campbell, Financial Analyst at Spreadex:
‘Reports that Boris Johnson has struck a deal with the DUP failed to lift Sterling’s spirits on Wednesday, mainly because the ‘two borders’ plan is unlikely to how much sway with Dublin or the EU.’
Euro to Pound (EUR/GBP) Exchange Rate Investors Await Eurozone Data for Support
Demand for the Euro to Pound (EUR/GBP) exchange rate is still limited, supported primarily by weakness in Euro rivals, as the Eurozone’s latest data fails to give investors much to be optimistic about.
As a result, traders are now looking ahead to tomorrow, when the week’s remaining notable Eurozone ecostats will be published.
Markit’s final services and composite PMI stats from September will be published, followed by the Eurozone’s August retail sales results.
If these stats come in well above forecasts, they could offer markets some sign that the Eurozone economy is recovering, which would give the Euro some more solid support.
Britain’s own September services and composite PMIs will be published as well, but with the UK government’s Brexit proposals coming into focus the Euro to Pound (EUR/GBP) exchange rate is more likely to be driven by Brexit and political news.