GBP/EUR Exchange Rate Falls as No-Deal Brexit Fears Rise
The Pound Euro (GBP/EUR) exchange rate fell by -0.35% today, leaving the pairing fluctuating around €1.092.
The Pound (GBP) slumped against the Euro (EUR) as UK-EU Brexit discussions show signs of breaking down as Prime Minister Boris Johnson continues to take a hard line stance, refusing to meet EU leaders unless they remove the Irish backstop from the withdrawal agreement.
A spokeswoman for Downing Street said:
‘The EU has said up to now it is not willing to renegotiate [the backstop] … The prime minister would be happy to sit down with leaders when that position changes. But he is making it clear to everybody he speaks to that that needs to happen.’
As the EU has refused this condition several times, Sterling traders are becoming increasingly jittery on the heightened possibility of a no-deal Brexit on 31 October.
The Euro, meanwhile, has struggled against many of its competitors following poor flash French growth figures for the second-quarter.
Emmanuel Jessua, an Economist at Rexecode Economic Institute commented:
‘The global context is not very favourable, which of course weighs on the French economic climate.’
EUR/GBP Exchange Rate Edges Higher Despite Easing German Consumer Confidence
The single currency also failed to benefit from the printing of the German GfK Consumer Confidence Survey for August, which confirmed consensus and eased from 9.8 to 9.7.
GfK Researcher Rolf Buerkl commented:
‘The trade war with the United States, ongoing Brexit discussions and the global economic slowdown continue to drive fears of a recession.’
Euro traders will, however, be awaiting today’s publication of the flash year-on-year German Harmonized Index of Consumer Prices figures for July.
As these are expected to ease from 1.5% to 1.3%, we could see the Euro begin to lose some of its gains against the Sterling.
These figures will also give a clue to tomorrow’s Eurozone core inflation data for July, which is due out tomorrow.
Any further signs of a weakening Eurozone economy would leave single currency traders feeling more apprehensive, as the European Central Bank would be perceived as more likely cutting rate forecasts as early as September.
GBP/EUR Outlook: Could Euro Begin to Ease Against Sterling on Weak Growth Figures?
Pound traders will be awaiting tomorrow’s publication of the UK GfK Consumer Confidence figures for July, which are expected to hold at -13.
Euro investors, meanwhile, will be looking ahead to tomorrow’s flash growth figures for the Eurozone, which are expected to ease slightly.
The GBP/EUR exchange rate is, however, expected to remain down as Brexit concerns continue to weigh on market sentiment in Pound Sterling.