Euro Pound (EUR/GBP) Exchange Rate Rallies as Sterling Struggles to Hold onto Last Week’s Gains
The Euro Pound (EUR/GBP) exchange rate rose over the course of Monday morning, as Brexit pessimism weighed on Sterling.
The pairing is currently trading at an inter-bank rate of £0.8572.
Sterling continues to struggle to hold onto last week’s gains as traders contemplate the Brexit possibilities that have opened up including a general election or a second referendum.
It is expected that the Prime Minister’s Brexit withdrawal agreement will be voted upon for a third time during the first half of this week’s session.
However, Chancellor Philip Hammond has said that Theresa May’s deal would only be put to MPs if ‘enough of our colleagues and the DUP [Democratic Unionist Party] are prepared to support it.’
It has been noted by Commerzbank Analysts that a vote on her agreement on Tuesday ‘would constitute a signal that she considers it possible that her deal will be accepted.’
Euro (EUR) Rises as Eurozone’s Trade Surplus Rises
Data this morning revealed that the Eurozone’s trade surplus with the United States and its deficit with China both increased in January.
Eurostat showed that the surplus in goods trade with the US rose by €11.5B from the previous €10.1B.
The bloc’s deficit with China jumped to €21.4B from €20.8B the previous year.
Sterling (GBP) Falls as UK Rightmove House Index Battered by Brexit Uncertainty
The Rightmove House Price Index revealed that between February and March the index showed its lowest monthly spring rise since 2011.
House prices rose by a monthly 0.4%, and the annual figure contracted by -0.8%.
Rightmove blamed Brexit uncertainty for delaying ‘the usual spring bounce.’
Commenting on the data, Rightmove Director, Miles Shipside said:
‘While March marks the start of spring, temperatures have yet to rise in the housing market. Buying activity remains cooler than usual, with hesitation as some buyers await a more settled political climate.
‘The closer you get to the wire without the clarity of an agreed way forward, the greater the propensity for buyers to wait and see rather than acting now. This could be a temporary pause, and indeed market slowdowns at election time and around the original referendum result bounced back pretty quickly. Markets and people do not like uncertainty, though while sales agreed numbers are down by 7%, that means they are still running at 93% of last year’s levels.’
Pound Euro Outlook: Will the EUR/GBP Exchange Rate Rally on Increased German Economic Sentiment?
Looking ahead to Tuesday morning, Sterling (GBP) could slide against the Euro (EUR) following the release of January’s UK average earnings.
If average earnings rise by 3.3% compared to the previous rise of 3.4%, it could dampen sentiment in the Pound.
However, this could be offset by the UK unemployment rate which is also due to be released.
If unemployment holds steady at 4% as forecast, or dips below that, the Pound could rise against the single currency.
The Euro could rise against the Pound following the release of the German ZEW economic sentiment survey for March.
If economic sentiment rises from -13.4 to 11.3 as forecast, the Euro Pound (EUR/GBP) exchange rate could rally.