GBP/EUR Exchange Rate Edges Higher as Germany’s Central Bank Slashes Growth Forecast
The Pound Euro (GBP/EUR) exchange rate rose today and is currently trading around €1.128 on the inter-bank market.
The Euro (EUR) fell against the Pound (GBP) following the release of the German industrial production figures for April, which eased to a worse-than-expected -1.9%.
These were followed by the German trade balance figures for April, which also fell below the consensus of €18.6bn to a disappointing €17.0bn.
These were also followed by a gloomy forecast by Germany’s central bank, Bundesbank, which slashed its forecast GDP figures by just 0.6%, down from the previous 1.6%.
The Bundesbank said in its statement:
‘The German economy is currently experiencing a marked cooldown. This is mainly due to the downturn in industry, where lacklustre export growth is taking a toll.’
French trade balance figures also eased today, leaving many Euro traders concerned about the state of the Eurozone’s economy.
Controversy surrounding Italy is still raising concern for single currency traders, with Rome facing possibly disciplinary action from the European Commission for violating debt rules.
GBP/EUR Exchange Rate Rises as UK House Prices Improve
The Pound (GBP) benefited following the UK Halifax house prices figures for May, which improved above forecast at 0.5%, while the annual figures also shot up by 5.2% – restoring confidence in the UK’s economy.
In UK political news, meanwhile, Labour managed to defeat the Brexit Party in Peterborough’s by-election, despite predictions running high that the Brexit Party would secure the seat.
Labour leader Jeremy Corbyn commented:
‘This result shows that in spite of the divisions and deadlock over Brexit, when it comes to a vote on the issues that directly affect people’s lives, Labour’s case for real change has strong support across the country.’
However, with increasing uncertainty surrounding the future leader of the Conservative Party, and an ongoing parliamentary deadlock over Brexit, this has left many Pound traders remaining cautious.
GBP/EUR Outlook: Brexit and Conservative Leadership to Remain in Focus
Euro traders will be looking ahead to Monday’s publication of the Italian industrial output figures for April, although these are not expected to improve, and many weigh on market sentiment in the single currency.
Monday will see French and German markets closed for the Bank Holiday, Whit Monday.
Sterling investors will be looking to Monday’s UK manufacturing production figures for April, and with any signs of an increase this could buoy the GBP/EUR exchange rate.
The Pound Euro (GBP/EUR) exchange rate will be directed by Brexit developments next week, and with uncertainty rising both over the UK’s relationship to the EU and Conservative leadership, it is unlikely we’ll see any sudden rises for Sterling.