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Euro to Pound (EUR/GBP) Exchange Rate Rises despite Eurozone PMI Slowdown

Signs of Sliding Economic Activity Fail to Prevent EUR/GBP Exchange Rate Rise

The Euro (EUR) has firmed against the Pound (GBP) today, rising by 0.5% to an exchange rate of £0.8916.

This puts the EUR/GBP exchange rate near a 1-week high and comes despite unsupportive Eurozone PMI data.

September’s estimates have shown a slowdown, not to the point of contraction but still by enough to provoke negative reactions.

One of the most critical comments has come from IHS Markit Chief Business Economist Chris Williamson, who said:

‘A near stagnation of exports contributed to one of the worst months for the Eurozone economy for almost two years.’

Mr Williamson later touched on the caveat to this data, stressing that:

‘Thankfully, the slowdown was limited to manufacturing.

‘A buoyant service sector, boosted in part by domestic demand being supported by strong job gains, means the survey data are running at a level indicative of the economy growing by a solid 0.5% in Q3 2018.’

Pound to Euro (GBP/EUR) Exchange Rate Drops -0.5% after Disastrous EU Summit

The Pound (GBP) has fallen across the board today, making noticeable losses against the Euro (EUR) and most other currency peers.

This near-universal decline follows Thursday’s EU summit, where EU leaders categorically rejected UK Prime Minister Theresa May’s ‘Chequers plan’.

The meeting ended fruitlessly, with the PM’s threat of a no-deal Brexit if the Chequers plan wasn’t approved hanging over proceedings.

The most damning assessment came from European Council President Donald Tusk, who said:

‘Everybody shared the view that while there are positive elements in the Chequers proposal, the suggested framework for economic co-operation will not work, not least because it is undermining the single market.’

The PM stuck to her guns despite the negative reception, later declaring:

‘[The Chequers plan is the] only serious and credible [proposal].

‘I’m negotiating and I’m negotiating hard in the interest of the British people, and negotiating to deliver on what the British people voted for in the referendum.’

It is now increasingly unclear whether UK and EU negotiators will be able to reach an agreement by the provisional deadlines, which is why the Pound has tumbled today.

Euro to Pound Sterling Forecast: Is EUR/GBP Exchange Rate Volatility ahead on German Confidence Stats?

Looking ahead to the coming week, Monday’s German confidence data could cause early EUR/GBP exchange rate turbulence.

Ifo’s September readings of the German business climate, current conditions and future expectations are all out on Monday morning.

Perceptions of the business climate are tipped to fall, but otherwise the Euro could be supported if current conditions and expectations stats are reported higher.

Beyond the opening data releases, the Euro could also be affected by Thursday’s high-impact Eurozone-wide confidence measures for September.

During the month, levels of business confidence and consumer confidence are both expected to decline, which could cause EUR/GBP losses.

Next week’s only major UK data will be Friday’s GDP stats for Q2 2018, which are tipped to show a faster pace of growth on the quarter and the year.

Such results could boost Pound Sterling demand, potentially triggering GBP/EUR exchange rate gains leading into the weekend.