GBP/EUR Exchange Rate Falls as German Manufacturing Contracts to Lowest Since 2012
The Pound Euro (GBP/EUR) exchange rate is down today and is currently trading around €1.1279 on the interbank market.
The Euro (EUR) gained against the Pound (GBP) following the release of the Spanish Markit manufacturing PMI figures for May, which narrowly avoided contraction at 50.1 – falling below the consensus growth of 51.3.
German manufacturing also further contracted at 44.3, leaving many Euro traders feeling skittish as the Eurozone’s economy shows signs of slowing down.
Phil Smith, the Principal Economist at IHS Markit, commented:
‘Overall, the PMI data continue to paint a negative picture for Germany’s manufacturing sector, with the headline Index remaining close to its lowest since 2012.’
The Pound, meanwhile, was let down by the UK Markit manufacturing PMI figures for May, which contracted below consensus at 49.4 – leaving many Sterling traders feeling jittery as the UK economy shows signs of struggling due to Brexit uncertainty.
GBP/EUR Exchange Rate Sinks as T ory Leadership Concerns Rise
Sterling has continued to weaken today, with US Donald Trump’s state visit to the UK remaining in focus, temporarily side-lining many of the Brexit developments despite the US ambassador alarming some traders of the US’ possible intervention into the NHS post-Brexit.
Meanwhile, Foreign Secretary Jeremy Hunt has said he would indeed back a no-deal Brexit should the circumstance arise, but, he added, it would be with a ‘heavy heart’.
Mr Hunt said:
‘My position on this hasn’t changed at all. I’ve always said that in the end, if the only way to leave the European Union, to deliver on the result of the referendum, was to leave without a deal, then I would do that.’
The Pound has further weakened on increasing no-deal fears, and with the question mark still hanging over the leader of the Conservative Party when Theresa May steps down on Friday, this is causing concern should a hard-Brexiter like former Foreign Secretary Boris Johnson becomes more favourable amongst MPs.
GBP/EUR Outlook: Sterling Could Rise on Improved UK Construction Figures
Euro investors will be looking ahead to the release of the Eurozone’s Consumer Price Index (CPI) figures for May tomorrow, which are expected to grow.
Tomorrow will see the Eurozone’s unemployment rate figures for April, which are expected to hold at 7.7%.
Sterling traders, meanwhile, will be looking ahead to tomorrow’s Markit construction PMI figures for May, which are expected to remain at 50.5 – any decrease, however, could see the Pound sink further against the Euro.
The Pound Euro exchange rate will be driven by political developments this week, and with any breakthroughs regarding Brexit or the new Tory leadership, this could lend Sterling some uplift with the much-needed break in the current deadlock.