Euro Pound (EUR/GBP) Exchange Rate Flat as PM Says he Will Not Delay Brexit
UPDATE: The Euro Pound Sterling (EUR/GBP) exchange rate remained flat and the pairing is currently trading at an inter-bank rate of £0.8941.
Sterling remained muted against the single currency as the risk of the UK crashing out of the EU without a deal remained a real risk.
Prime Minister Boris Johnson said he would not request an extension of Article 50 just hours after the Brexit delay bill became law.
Speaking to parliament after he lost the vote on an early election, the Prime Minister stated:
‘This government will press on with negotiating a deal, while preparing to leave without one.
‘I will go to the crucial summit on October the 17th and no matter how many devices this parliament invents to tie my hands, I will strive to get an agreement in the national interest […] This government will not delay Brexit any further.’
Euro Pound (EUR/GBP) Exchange Rate Left Muted as UK Job Growth Slows
The Euro Pound Sterling (EUR/GBP) exchange rate remained muted and the pairing is currently trading around £0.8955.
Tuesday’s UK employment data revealed the unemployment rate edged lower to 3.8% in July.
The Office for National Statistics (ONS) revealed the employment rate was 76.1%, the joint-highest on record.
Added to this, average earnings including bonuses rose by a better-than-expected 4% in the three months to July.
This was the highest increase in this measure since June 2008.
However, the number of jobs created rose by 31,000 in the three months to July.
This is a sharp decline from the last month’s increase of 115,000 new jobs in Q2 2019.
This suggests firms are cutting back on hiring amidst the current uncertainty.
Euro (EUR) Left Under Pressure Ahead of ECB Rate Decision
The single currency remained under pressure ahead of Thursday’s key central bank meeting.
The European Central Bank (ECB) is expected to ease monetary policy, and recent disappointing data could push the bank closer to negative interest rates.
However, reports suggested that Germany could set up independent public agencies to invest in the country’s ailing economy.
It is said this would be done without breaking strict national spending rules.
This news provided the Euro with a slight temporary upswing of support.
Commenting on this, chief strategist at ACLS Global, Marshall Gittler stated:
‘This news caused some people to revise down their expectations for Thursday’s ECB meeting, although I think that’s entirely premature.
‘I think the small rally in EUR today just sets up the currency for a bigger fall on Thursday.’
Sterling (GBP) Edges Lower as Parliament Officially Suspended
Sterling was left muted against the Euro as British Parliament has been officially suspended until 14 October.
This comes after opposition MPs voted against the Prime Minister’s second call for an early general election.
MPs that refused to back Boris Johnson’s calls for a snap election insisted a law blocking a no-deal Brexit would first have to be implemented.
There was little movement of the Pound following the vote, and Senior FX strategist at National Australia Bank, Rodrigo Catril noted:
‘Over the past 24 hours there has been a move toward more risk-friendly, pro-growth currencies.
‘But it is kind of a lull period following a whole stream of positive news last week. We’re in a wait-and-see mode with major risk events like Brexit and trade negotiations being kicked down the road.’
Euro Pound Outlook: Dovish ECB to Weigh on EUR?
Looking ahead to Thursday, it is likely the Euro (EUR) will remain under pressure ahead of the European Central Bank’s (ECB) interest rate decision.
If the central bank turns dovish and hints a rate cut is in the near future, the Euro will fall against the Pound (GBP).
Meanwhile, ECB President Mario Draghi’s speech following the decision could dampen single currency sentiment further.
If Draghi’s tone is overly dovish and highlights the weaknesses in the bloc’s largest economy, the Euro Pound (EUR/GBP) exchange rate could slide.