EUR/GBP Exchange Rate Falls as MPs are Deemed Unlikely to Prevent No-Deal
The Euro Pound (EUR/GBP) exchange rate fell today, leaving the pairing trading around £0.929 on the interbank market.
The Pound (GBP) bounced back after falling to a ten-year low against the Euro (EUR) last week, despite the UK think tank Institute for Government (IfG) saying that MPs would be unlikely to prevent a no-deal Brexit on October 31.
Joe Owen, the Brexit Program Director for IfG, commented:
‘MPs looking to force the government into a change of approach face a huge challenge when parliament returns… Even if they can assemble a majority for something, they may find few opportunities to make their move – and time is running out.’
Meanwhile, the Irish Prime Minister Leo Varakar has commented that the Irish backstop would not renegotiated in talks with Prime Minister Boris Johnson in September.
As a result, Sterling traders are becoming increasingly jittery on the now increased likelihood of a disorderly exit from the EU.
EUR/GBP Exchange Rate Sinks as German Economic Concerns Rise
The Euro has struggled to gain on the Pound today as concerns surrounding the health of Germany’s economy – the largest economy in the Eurozone – have remained in focus today.
Also, with US-China trade war leaving Euro investors jittery as the European economy struggles on global trade uncertainties, Euro markets have remained downbeat today.
Florian Hense, an Economist at Berenberg Bank, commented:
‘As uncertainty about the future trading regime is pervasive, businesses have cut their outlook and their investment plans. The slowdown in Chinese actual and potential growth, which the trade tensions have exacerbated, also weighs on demand for Eurozone exports.’
Italian political uncertainty has also weighed on market sentiment in the European currency, following comments from Italy’s Deputy Prime Minister Matteo Salvini, a known Eurosceptic, who called for a snap election over the weekend.
This has heightened fears that the Italy could proceed with its own ‘Brexit’ should Mr Salvini secure a majority.
EUR/GBP Outlook: Could the Euro Sink Further on German Recession Fears?
Pound traders will be awaiting tomorrow’s publication of the ILO unemployment rate figure for June, which is expected to remain at 3.8%.
Meanwhile, UK average earnings are expected to improve, rising from 3.4% to 3.7%.
Euro investors will be keeping a close eye on the German inflation figures for July tomorrow.
Any indication of a weakening German economy would heighten fears of a recession in the bloc’s largest economy, potentially weakening the Euro to Pound exchange rate.
Tomorrow will also see the publication of the German ZEW Survey for August, which is expected to drop from -24.5 to -30.
The EUR/GBP exchange rate could further sink tomorrow if the Eurozone’s economic data points to a possible recession in the German economy.