Euro Pound (EUR/GBP) Exchange Rate Muted as German Construction Recovers from 62-Month Low
The Euro Pound Sterling (EUR/GBP) exchange rate was left muted and the pairing is currently trading at around £0.8895.
The single currency was left muted against Sterling as PMI data showed German construction activity edged up.
The sector concluded the third quarter on a more stable footing.
Markit’s PMI jumped from August’s 62-month low of 46.3 to 50.1 in September.
Commenting on the data, Markit’s Principal Economist, Phil Smith stated:
‘The brief downturn in construction activity ended in September, as homebuilding staged a mild recovery and the rates of decline in commercial and civil engineering activity eased. Total industry showed the smallest of increases. Which was an improvement in the context of the recent falls but achieved mainly through work on backlogs as new orders dropped again.
‘Expectations for activity over the coming year remain subdued relative to the highs in 2017 and 20218, which in large part reflects concerns that the downturn in the manufacturing sector will weigh on the number of new commercial building projects.’
Sterling (GBP) Left Flat as EU ‘Not Convinced’ by PM’s Brexit Proposals
Pound sentiment was dampened after reports revealed the European Union is ‘open but not convinced’ by the Prime Minister’s new Brexit deal.
European Council President Donald Tusk was one of the many to express caution over Prime Minister Boris Johnson’s plan.
Johnson’s plan would see Northern Ireland leave the customs union but stay in the EU single market.
Leo Varadkar said that while the fresh plans were welcome, they ‘fall short in a number of aspects’.
The mixed reactions to the Prime Minister’s plans likely weighed on Sterling at the end of the week.
Euro (EUR) Left Muted as US Slaps $7.5 Billion Tariffs on EU Goods
On Thursday, US President Donald Trump called new tariffs on EU goods a ‘nice victory’.
Wednesday’s decision from the World Trade Organization (WTO) gave the United States the go-ahead to slap $7.5 billion worth of tariffs on EU goods annually, leaving the single currency muted at the end of the week.
Speaking to Fox Business Network, White House trade advisor, Peter Navarro warned the EU against retaliatory measures, and stated:
‘There’s going to be no tit-for-tat retaliation.
‘Under the rules of the WTO, which we’re complying with here, we get to do this and they should not do anything back.’
However, French Finance Minister, Bruno Le Maire said there were preparations for reactionary sanctions, and stated:
‘If the American administration rejects the hand that has been held out by France and the European Union, we are preparing ourselves to react with sanctions.’
Euro Pound Outlook: Will German Factory Orders Buoy EUR?
Looking ahead to Monday, the Euro (EUR) could edge up against the Pound (GBP) following the release of German factory orders data.
If August’s factory orders rebound following July’s slump, the Euro Pound (EUR/GBP) exchange rate could rally.