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Pound Euro (GBP/EUR) Exchange Rate Steadies as German Trade Rises above Expectations

EUR GBP Exchange Rate

GBP/EUR Exchange Rate Rangebound as German Exports Increase

The Pound Euro (GBP/EUR) exchange rate is steady today and is currently trading around €1.1418 on the inter-bank market.

Sterling (GBP) remained unmoved against the Euro (EUR) today after the publication of the German trade balance figures for December, which exceeded expectation and increased to €19.4bn.

These were also followed by a rise in German exports figures for December, which increased above expectation by 1.5%.

This has seen a return of some confidence in the Euro as markets have been becoming increasingly concerned about signs of a slowing Eurozone economy.

Some of the gains, however, were clipped by the publication of the Italian industrial output figures for January, which decreased by a worse-than-expected -0.8%.

Italy’s economy is an ongoing concern for EUR traders, with the country recently falling into a recession.

The UK, meanwhile, will see no significant economic data release today, with Sterling traders instead focusing on Brexit developments.

Prime Minister Theresa May has headed for Dublin to meet with her Irish counterpart, Leo Varadkar, and discuss aspects of the Irish backstop.

GBP traders, however, are remaining cautious as both Varadkar and the EU have consistently rejected renegotiations on the Northern Irish border issue.

Pound Euro (GBP/EUR) Exchange Rate Steadies after BoE Forecast

The Pound has remained relatively unmoved today after the Bank of England announced its interest rate decision yesterday, which remained steady at 0.75%.

This, however, was followed by the Governor of the Bank of England, Mark Carney, saying that the BoE would slash its growth forecast.

Carney commented:

‘At present the economy has slowed because of a weaker world, including a weaker Europe, but also because of the [Brexit] uncertainty.’

Yesterday also saw Theresa May meet with the EC President Jean-Claude Juncker in Brussels, in which she attempted to come to a consensus over the UK-EU withdrawal agreement and gain legally-binding changes over the Northern Irish backstop.

Although May said that these talks had been ‘robust but constructive’, there have been no notable signs of development with regards the EU and the UK coming to any agreement – leaving many GBP traders concerned over a possible no-deal Brexit.

GBP/EUR Forecast: Pound Could Rise on Positive UK GDP Figures on Monday

GBP traders will be looking ahead to Monday’s UK GDP figures for the fourth-quarter, which are expected to decrease.

These will be followed by UK industrial production figures for December, which are expected to increase.

Monday will also see the release of the UK manufacturing production figures for December, which are also expected to rise, and potentially providing some uplift for Sterling.

EUR traders will be awaiting the publication of the German ZEW survey on economic sentiment for February, which is likely to decrease.

The GBP/EUR exchange rate will once again be driven by Brexit developments next week, as Theresa May continues to try and gain support for her newly-amended Brexit deal, amid an increasingly divided Parliament and stubborn EU.