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Euro to Pound Sterling Exchange Rate Climbs as Sterling Support Wears Off

Euro to Pound Exchange Rate Gains as Sterling Tumbles from Rebound

Speculation that Germany’s government and the European Central Bank (ECB) could take efforts to head off a potential German recession had a mixed impact on the Euro to Pound Sterling (EUR/GBP) exchange rate to climb today.

Following last week’s fall of almost two pence from 0.9313 to 0.9131, EUR/GBP has rebounded just slightly this week so far.

EUR/GBP trended closer to the level of 0.9164 at the time of writing today, resuming its attempts to advance after dipping overnight.

Investors have been buying the Euro to Pound exchange rate due to Pound (GBP) weakness, but there could be more notable movement on major data due later in the week.

Euro (EUR) Exchange Rates Mixed amid Stimulus Speculation

While the Euro (EUR) was supported slightly on Monday by speculation that Germany was preparing fresh fiscal stimulus to boost its economy, European Central Bank (ECB) speculation weighed on the Euro today.

ECB official Olli Rehn said that the bank was determined to act if Eurozone inflation continued to fall short of the 2.0% inflation target. He said:

‘Despite the stronger labour market and accelerating wages, inflationary pressures remain muted, and indicators of inflation expectations have declined with the weakening economic outlook,’

While the ECB’s actions could also help to avoid a damaging recession in Germany or other Eurozone nations, expectations for even looser Eurozone monetary policy left the Euro less appealing.

Pound (GBP) Exchange Rates Tumble Back ahead of Fresh Brexit Talks

The Pound (GBP) saw a surge in demand towards the end of last week, as UK economic and political fears that had worsened for weeks finally lightened slightly.

Hopes that Britain’s opposition parties could cooperate to oust the UK government and prevent a no-deal Brexit accounted for much of last week’s Pound recovery.

However, while those hopes persist, fears that a no-deal Brexit could become reality under the current government are keeping significant pressure on the Sterling and UK outlooks.

This week, UK Prime Minister Boris Johnson is set to hold fresh talks with EU officials, including German Chancellor Angela Merkel and French President Emmanuel Macron.

Hopes that Johnson would accept a renegotiation of the political declaration while leaving the agreement itself alone were doused by a letter Johnson sent to European Council President Donald Tusk yesterday.

This caused fresh no-deal Brexit concern and weighed on the Pound today.

Euro to Pound (EUR/GBP) Exchange Rate Awaits Further Political News and Data

Euro to Pound (EUR/GBP) exchange rate investors have had little major to react to this week so far. As the Euro is steadying stimulus speculation and the Pound is edging lower amid continued Brexit fears, the pair awaiting more influential news.

This week’s UK data will be fairly low influence, with public borrowing data due tomorrow and CBI’s distributive trades report on Thursday. Sterling investors are more likely to react to potential Brexit developments.

The Euro is also more likely to drive EUR/GBP, with multiple notable Eurozone ecostats due for publication on Thursday.

The Eurozone’s August PMI projections from Markit will be published and are expected to weaken even further following months of slowdown. Eurozone consumer confidence stats from August will be published on Thursday as well.

Of course, any fresh comments from Eurozone or European Central Bank (ECB) officials on potential monetary or fiscal stimulus could also influence the Euro to Pound (EUR/GBP) exchange rate.