Euro Pound (EUR/GBP) Exchange Rate Edges Higher on Brexit Pessimism
The Euro Pound Sterling (EUR/GBP) exchange rate edged up and the pairing is currently trading at around £0.8918.
The Pound slumped against the Euro at the start of this week’s session as investors became increasingly worried the UK would not be able to secure a last-minute Brexit deal.
Speaking to the British Prime Minister, French President Emmanuel Macron stated that the EU would decide at the end of the week whether or not a Brexit deal ‘that respects European Union principals’ is going to be possible.
Meanwhile, Boris Johnson has said that the EU should not be ‘lured’ into thinking that a Brexit delay beyond the end of October is possible.
The chance of the two sides reaching a deal by the end of the week seems slim, and ING analysts have suggested there is around 10-15% chance.
An anonymous senior Number 10 source stated.
‘The UK has made a big, important offer but it’s time for the Commission to show a willingness to compromise too. If not the UK will leave with no deal.’
Euro (EUR) Rises despite Signs Germany is in ‘Midst of a Recession’
The single currency edged up against the Pound despite data added to signs that a manufacturing slump is pushing Germany towards a recession.
Industrial orders in the bloc’s largest economy slumped further than expected in August thanks to weaker domestic demand.
German factory orders slumped -0.6% as export-reliant manufacturers are suffering from slower global economic growth thanks to Brexit uncertainty and US-China trade tensions.
Commenting on this, VP Bank Group economist, Thomas Gitzel noted:
‘The German economy is in the midst of a recession. Today’s data make that clear again.
‘The German government will probably come under growing pressure to give up its strict budget policy.’
Euro Pound Outlook: Will a Dovish BoE Carney Weigh on GBP?
Looking ahead to Tuesday, the Pound (GBP) could slide against the Euro (EUR) following a speech from the Bank of England (BoE) Governor Mark Carney.
If Carney discusses monetary policy and his tone is overly dovish, Sterling sentiment could be left under pressure.
Meanwhile, further disappointing data from the bloc’s largest economy could weigh on the Euro, leaving the pairing muted.
If August’s German industrial production slumps further than expected, the Euro Pound (EUR/GBP) exchange rate is likely to be left muted.