GBP/EUR Exchange Rate Flat as ECB Rate Cut Fears Rise
The Pound Euro (GBP/EUR) exchange rate held steady this morning and is currently trading around €1.115.
The Euro (EUR) stabilised against the Pound (GBP) following this morning’s printing of the German factory orders figures for May.
These fell from 0.4% to -2.2%, versus the consensus of -0.2%.
Russ Mould, an Investment Director at AJ Bell, said:
‘This will worry the European Central Bank and raise expectations of more monetary stimulus in the near future.’
Ralph Solveen, an Economist at Commerzbank, was also downbeat, saying:
‘[O]ur expectation that the German economy shrank in the second quarter and that hopes of a noticeable improvement in the third are dwindling.’
As Germany is the Eurozone’s largest economy, this has held back the European currency today.
The Pound, meanwhile, failed to benefit from its annual Halifax house prices figures for June, which to their highest levels since early 2017.
GBP/EUR Exchange Rate Rangebound as No-Deal Brexit Fears Heighten
There are no other UK data releases due out until next week.
Instead, the ongoing Tory leadership race and Brexit will remain in focus.
Sterling traders have become increasingly jittery as Tory leadership favourite Boris Johnson has shown increasing favourability for a no-deal Brexit.
This follows comments made yesterday during an event in York, in which Mr Johnson pledged said that in the event of a no-deal the £38bn ‘divorce settlement’ could be used to support lavish spending on his pledged £5bn extra money for schools.
‘It may have escaped your notice, but in the event of a no-deal Brexit, we will have an additional £39bn to spend.’
Meanwhile parliamentary frictions have increased, with Exchequer Philip Hammond saying that MPs would, on the whole, block a chaotic exit from the European Union.
The Institute of Directors (IoD) survey also found that businesses are becoming more pessimistic about the UK’s economy.
This has further held back market confidence in the Pound today.
GBP/EUR Outlook: German Industrial Production Figures in Focus
Euro traders will be looking ahead to Monday’s release of the German industrial production figures for May.
Any signs of improvement could see a return of confidence to the Eurozone’s markets.
Monday will also see the printing of the German trade balance figures for May, which are forecast to improve.
Sterling traders, however, will be looking ahead to Tuesday’s annual BRC like-for-like retail sales figures for June.
The Pound Euro (GBP/EUR) exchange rate will, however, remain sensitive to any comments surrounding Brexit, and with any signs of a no-deal being more likely, we could see the pairing fall.