Upwardly Revised UK Growth Fails to Dent Euro Pound Sterling (EUR/GBP) Exchange Rate
A surprise upward revision to the finalised fourth quarter UK gross domestic product failed to prevent the Euro to Pound Sterling (EUR/GBP) exchange rate gaining ground this morning.
While the UK economy demonstrated greater signs of resilience, showing growth of 1.4% on the year, this was eclipsed by ongoing market worries over Brexit.
With MPs preparing to vote on Theresa May’s already rejected Brexit proposal once again investors saw little incentive to favour Pound Sterling (GBP) over its rivals.
The latest Brexit deadlock saw the odds of the UK leaving the EU without any deal in place increase.
With the potential extension to the new April exit date tied to Parliament supporting May’s plan this stoked further anxiety among investors.
Confirmation that UK business investment fell for a fourth consecutive quarter at the end of 2018 put additional pressure on GBP exchange rates, meanwhile.
Euro (EUR) Demand Limited amid Mixed German Economic Data
Support for the Euro (EUR) proved limited, on the other hand, thanks to the mixed nature of March’s German unemployment data.
Although the unemployment rate eased from 5.0% to 4.9% this was driven by a smaller decline in the number of unemployed individuals than forecast.
With confidence in the outlook of the Eurozone’s powerhouse economy muted this offered the single currency little in the way of support.
In the wake of yesterday’s disappointing German consumer price index data EUR exchange rates struggled to find any particular traction.
While the US and China showed signs of progress towards a fresh trade agreement this failed to ease lingering worries over the health of the global economy.
As forecasts point towards a weak showing from Monday’s raft of Eurozone manufacturing PMIs, confirming that the sector has slowed, demand for the Euro looks set to remain muted.
Third Rejection of Brexit Proposal Set to Drive Further Pound Sterling (GBP) Losses
Brexit developments look set to dominate the direction of the EUR/GBP exchange rate in the days ahead.
If MPs reject the proposed Brexit deal for a third time this could see the Pound losing further ground across the board, with the move paving the way for fresh uncertainty.
Until markets see a clear path through the Brexit process the mood towards Pound Sterling is unlikely to see any material improvement.
Higher odds of the UK crashing out of the EU without a deal in April could shore up the EUR/GBP exchange rate, even in the face of ongoing Euro softness.
As Theresa May’s position as prime minister looks increasingly fragile the prospect of fresh political turmoil may also weigh heavily on GBP exchange rates.
Any fresh loss of momentum in March’s UK manufacturing PMI could equally drive investors to sell out of the Pound, offering the EUR/GBP exchange rate an additional boost next week.