Although Brexit news has been negative today, the Pound has still ticked higher against the Euro.
The pairing traded around a rate of 1.1315 on Tuesday, but has since advanced to 1.1355.
This appreciation comes against the odds, given that the government’s Brexit strategy has come under increasing scrutiny today.
On the one hand, Democratic Unionist Party (DUP) officials have claimed that they only knew about the now-rejected border deal at the last minute.
On the other, Brexit Secretary David Davis has outraged MPs by admitting that economic impact assessments for post-Brexit are actually non-existent.
(First published December 5th, 2017)
The Pound has struggled to make any gains at all today, having tumbled against the Euro because of growing fears of missed Brexit deadlines.
- GBP EUR trades lower at 1.1315 – EUR GBP rate rises to 0.8833
- Pound slides as Irish border issues persist – No imminent resolution expected
- Euro aided by rising economic activity – Eurozone retail sales dropped sharply
- Will Pound rebound on Brexit breakthrough? – Euro could rise further on German building stats
The Euro has had a much better day of trading, having advanced against the dented Pound thanks to supportive PMI readings.
Pound to Euro Rate Remains Turbulent with Irish Border Solution in Doubt
Growing uncertainty about an immediate solution to the Irish border problem has weakened the Pound today, in a repeat of the GBP slump seen on Monday.
News has come that UK PM Theresa May will not be meeting with Democratic Unionist Party (DUP) leader Arlene Foster today, meaning that a quick fix is off the table.
While May has recently claimed that she is ‘very close to getting an agreement’ with the EU over Brexit, this has done nothing to reassure rattled traders.
Rising Eurozone PMI Stats Prevent Euro to Pound Decline
The Euro has seen a moderate rise against the Pound today, although other movement has been more mixed.
The EUR/GBP advance comes partly because of Pound weakness, but is also down to supportive Eurozone PMI data.
In November, finalised Eurozone services and composite PMIs have shown higher activity across the Eurozone, which has been enough to raise confidence in the Euro.
Elsewhere, however, Eurozone-wide retail sales figures have proven disappointing. On the month in October, sales have slowed or fallen into a negative range.
GBP/EUR Volatility Likely to Persist as Brexit Discussions Drag On
There isn’t much UK data of interest on Wednesday, which will leave Brexit talks as the main GBP influencer.
If, by a Christmas miracle, Theresa May can unify the UK government and the DUP on an Irish border agreement, then the Pound could suddenly rally.
Tension is building ahead of next week’s Eurogroup summit, so the pressure is on to make some kind of tangible breakthrough in Brexit negotiations.
Wednesday’s most notable Eurozone data will come in the morning, consisting of the German construction PMI for November.
This is tipped to show a small rise in sector growth, from 53.3 points to 53.6.
While minor, a forecast-matching rise could still support the Euro as the German economy is the largest in the Eurozone.
The other notable Eurozone news out around the same time will be retail PMI stats for November.
Across the single currency bloc, retail activity is expected to rise slightly.
This isn’t considered as high-impact as the German data, but Eurozone economic growth from any field is still good news.
Current Interbank GBP EUR Exchange Rates
At the time of writing, the Pound to Euro (GBP EUR) exchange rate was trading at 1.1315 and the Euro to Pound (EUR GBP) exchange rate was trading at 0.8833.