Pound to Euro Exchange Rate Struggles to Advance on Fresh No-Deal Brexit Fears
Yesterday’s latest developments in UK politics let to yet another surge in concerns that Britain could be headed for a no-deal Brexit, and the Pound Sterling to Euro (GBP/EUR) exchange rate has fallen.
Since opening this week at around the level of 1.1000, GBP/EUR has seen mixed movement. GBP/EUR touched on a monthly high of 1.1085 near the middle, but has since fallen again,
GBP/EUR trends closer to the level of 1.1013 at the time of writing today, and has sustained most of last week’s gains despite the latest no-deal Brexit fears.
UK Prime Minister Boris Johnson has successfully asked the Queen to delay the Queen’s Speech event for as long as five weeks following the prorogation of Parliament. This has caused a surge in fears that a no-deal Brexit cannot be avoided.
Pound (GBP) Exchange Rates Unappealing as Fresh No-Deal Brexit Fears Flare Up
The Pound (GBP) had been edging higher for most of the week on hopes that Britain’s opposition politicians could collaborate to prevent a no-deal Brexit, but yesterday’s political developments came as a fresh shock to the British currency.
UK Prime Minister Boris Johnson proposed to the Queen that the new Queen’s Speech which resets the Parliamentary session be held before the Brexit date of the 31st of October.
Vitally however, Johnson asked the speech to be held after a longer period than usual following the suspension of Parliament. The plan to prorogue Parliament from the 9th of September until the 14th of October has been accepted.
This gives MPs precious little time through September and October to act on or oppose the government’s Brexit plans and prevent a no-deal Brexit. No-deal Brexit fears have flared up and the Pound has weakened.
Euro (EUR) Exchange Rate Strength Shaky amid Mixed Risk Sentiment and News
The Euro (EUR) has seen mixed performance this week, and shaky movement is continuing today.
As the Euro sees a negative correlation with the safe haven US Dollar (USD), it has been weaker today as investors look towards safe haven assets.
The latest safe haven demand comes from investor unease amid concerns about slowing global growth, the possibility of major economies falling into recession, and global geopolitical uncertainties.
Italy’s President is expected to be preparing to agree to a new coalition government between the 5-Star Movement and opposition Democratic Party (PD). Uncertainty in Italy has played a part in the Euro’s weakness, but if the situation ends smoothly the Euro could recover.
The latest Eurozone data has been decent, with French growth coming in a little higher than expected in Q2 2019. This has only had a limited impact on the Euro however.
Pound to Euro (GBP/EUR) Exchange Rate Investors Await German Data
The Euro’s movement may be a little less mixed if major Eurozone data surprises investors before the end of the week.
German retail sales, French inflation and overall Eurozone inflation data will be published tomorrow. The German retail data could influence German recession speculation, and the Pound to Euro (GBP/EUR) exchange rate could rise if the data disappoints.
Of course, while surprising data and German recession fears could drive the Euro, the major political focus of recent sessions is likely to persist as well.
UK consumer confidence will be published tomorrow, but the focus will remain on the Brexit crisis as investors look for any signs that a no-deal Brexit can be prevented.
Similarly, if Italy’s new coalition is confirmed and shows signs of going smoothly, the Pound to Euro (GBP/EUR) exchange rate could weaken.