EUR/GBP Exchange Rate Edges Higher as UK-EU Brexit Talks Fail to Show Willingness to ‘Break the Deadlock’
The Euro to Pound (EUR/GBP) exchange rate rose by 0.3% today, with the pairing currently fluctuating around £0.90.
Sterling struggled today despite reassurances from Downing Street that it was hopeful of an EU post-Brexit trade deal in September. Following comments from the EU’s Chief Negotiator, Michel Barnier, Pound investors have remained cautious.
Mr Barnier commented that the UK had failed to show a ‘willingness to break the deadlock’ over difficult issues in the agreement. He also added that Downing Street had failed to honour ‘fundamental principles which we have repeatedly made clear’.
In UK economic news, Pound (GBP) investors will be looking ahead to this evening’s publication of the GfK consumer confidence figure for April. Any improvement would buoy Sterling as hopes grow for Britain’s economic recovery.
Euro (EUR) Edges Higher as Safe-Haven Demand Spikes on Dovish US Fed Minutes
The Euro (EUR) rose today following the release of the US Federal Reserve’s minutes from its last meeting. As a result, safe-haven demand has spiked following a dovish statement from the Fed, which indicated that the economic outlook still remains largely uncertain.
The Fed said in its statement:
‘Uncertainty surrounding the economic outlook remained very elevated, with the path of the economy highly dependent on the course of the virus and the public sector’s response to it.’
Today also saw the publication of Germany’s producer price index (PPI) for July, which rose unexpectedly from 0% to 0.2%.
Consequently, this has buoyed demand for the single currency as the Eurozone’s largest economy continues to show improvement.
The Euro (EUR) has also continued to benefit from Bundesbank’s optimistic forecast for Germany’s economic growth over the summer months.
According to Bundesbank Europe’s largest economy is set for rapid growth. The bank said in its report:
‘The clear and broad-based recovery in macroeconomic performance, which began after the low point in April, will continue.’
‘The German economy should grow very strongly in the summer quarter of 2020.’
Later on today will also see the release of the European Central Bank’s (ECB) monetary policy meeting accounts. If the ECB is notably dovish in its minutes, then we could see the EUR/GBP exchange rate begin to struggle.
EUR/GBP Forecast: Could an Improving UK Services PMI Boost Sterling Tomorrow?
Pound (GBP) traders will be looking ahead to tomorrow’s publication of the flash UK Markit services PMI for August. Any improvement in the UK’s largest sector would buoy Sterling.
Tomorrow will also see the release of the UK’s manufacturing PMI, which is forecasts to rise from 53.3 to 53.8.
Euro (EUR) investors, meanwhile, will be eyeing tomorrow’s release of the Eurozone’s PMI composite figure for August. With the figure set to hold at 54.9, we could see the EUR/GBP exchange rate hold steady.