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Pound Euro Exchange Rate News: Theresa May’s Hard Brexit Indication Undermines GBP EUR Forecast

  • Pound Euro Exchange Rate News: New Three-Year-Lows Hit – GBP EUR could fall below 1.14
  • Prime Minister May: Brexit to Begin By March 2017 – Weekend news undermines Sterling Monday
  • UK Manufacturing Strong in September – Surges again after better-than-expected August
  • Update: UK Construction PMI Impresses – Sterling remains weak on Brexit panic
  • Forecast: UK Services PMI Ahead – Will September see a hat-trick of strong UK PMIs?

Pound Euro Exchange Rate News: Sterling Selloff Continues Tuesday

Tuesday’s Pound Euro exchange rate news saw GBP EUR extending its worst 2016 levels once more, hitting a new low of 1.1370 and its lowest levels since October 2011.

Sterling continued to be sold off on expectations of a ‘hard Brexit’ as well as news that the formal Brexit process would begin in March 2017.

As a result, even the day’s better-than-expected UK Construction PMIs were unable to help Sterling hold its ground. Markit’s Construction print had printed contractions for three consecutive months, but September’s score unexpectedly improved from 49.2 to 52.3.

Wednesday is likely to present a strong opportunity for Sterling to be bought up from its cheapest levels, assuming the Brexit-panic selloff calms to a stop.

If September’s UK Services and Composite PMI scores beat expectations as manufacturing and construction PMIs had done, this could offer Sterling the footing it needs to begin a more solid recovery rally in the latter-half of the week.

(Previously updated 8:48 BST 04/10/2016)

The latest Brexit jitters served as Monday’s Pound Euro exchange rate news, as UK officials began to offer more comments on Britain’s withdrawal from the European Union. Over the weekend, UK Prime Minister Theresa May announced that the Brexit process would begin before March 2017.

GBP EUR began the week around the level of 1.1540 after the pair failed to hold above the key level of 1.16 last week. The pair plunged on Monday morning, losing over half a cent on the weekend’s Brexit news and hitting a new three-year-low of 1.1437. Even an upbeat UK Manufacturing did little to support the British currency and the Pound also recorded substantial losses against the US Dollar over the course of the European session.

While the UK is set to release a couple of other fairly influential ecostats over the next couple of days, these latest Brexit concerns have the potential to keep the GBP EUR exchange rate on a downtrend for the foreseeable future.

Pound (GBP) Plummets; Article 50 will be Activated by March 2017

Despite solid British ecostats published over the last week, the Pound failed to hold its ground on Monday as investors reacted to the weekend’s latest Brexit news.

According to the UK’s Prime Minister, Theresa May, the formal process to withdraw Britain from the European Union will begin by March 2017 at the latest. The Brexit process is begun by activating Article 50 of the EU’s Lisbon Treaty.

Sterling plummeted on Monday in response to the news, as markets became increasingly doubtful of the possibility that Britain would retain access to the European Union’s single market after the Brexit. Bloomberg reported;

‘While the setting of a deadline for the Brexit trigger removes one risk that’s been hanging over UK businesses, the new premier left unanswered most questions about what leaving the EU will actually look like. 

Prime Minister May said she’ll invoke Article 50 of the EU’s Lisbon Treaty — which triggers two years of talks — by the end of March. She also promised to control immigration while retaining access to the single market, though the details remain hazy.’

However, Pound Sterling losses were slightly limited by an impressive UK Manufacturing score from Markit’s September PMI.

August’s uptick after July’s poor score appeared to continue in September as Manufacturing improved from 53.3 to a healthy 55.4.

Euro (EUR) Holds Ground on Recent Inflation Data, Markit PMIs

The Euro was able to hold its ground during Monday’s European session as the latest data from the Eurozone bloc continued to print solidly.

Following last Friday’s news that Eurozone inflation was on track to improve to 0.4% year-on-year in September as expected, Monday’s Eurozone stats also boosted the currency as Markit’s Manufacturing PMIs for the bloc scored a little better than expected.

Manufacturing improved from 49.8 to 51 in Italy and from 49.5 to 49.7 in France. The Eurozone’s overall Manufacturing figures came in at 52.6 as expected. According to Reuters;

‘Manufacturing activity in the Eurozone picked up last month as demand increased from both within and outside the currency bloc, driving factories to increase headcount, a survey showed on Monday.

However, the upturn remained uneven and was centred on Germany and its neighbours. Growth was far weaker than earlier in the year in Spain, Italy and Ireland, while manufacturing in France continued to decline.’

The Euro was weighed down slightly however, by jitters surrounding last week’s Deutsche Bank news as well as fresh concerns over Greece’s economic struggles this week.

Pound Euro Exchange Rate Forecast: Final September UK and Eurozone PMIs Ahead

While Brexit concern is likely to continue to affect Pound Euro exchange rate news this week, various key ecostats will also be published for both Britain and the Eurozone over the next few days.

Tuesday’s session will see the publication of Britain’s September Construction PMI from Markit, which is expected to have worsened slightly from August’s score of 49.2. Services and Composite scores will be published on Wednesday and are also expected to slip slightly.

However, as Monday’s UK Manufacturing score beat expectations considerably, it is possible Britain’s other sectors could also impress. If they do, Sterling may be able to recover from its Brexit-influenced lows.

Over in the Eurozone, August’s producer price results will be published on Tuesday with a slew of final September PMI scores being published on Wednesday.

As preliminary German Services figures were heavily disappointing, any improvement in that print could bolster the Euro’s defences slightly. The Eurozone’s August retail sales scores are also due on Wednesday, and could weaken the Euro if they come in even lower-than-expected.