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Pound Euro (GBP/EUR) Exchange Rate Steady, German Recession ‘Almost Official’

GBP/EUR Exchange Rate Rangebound, German Recession Fears Rise

The Pound Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently trading around €1.161 after September’s German industrial production fell below forecasts from 0.4% to -0.6%, further adding to fears for a German recession.

Thomas Gitzel, an Economist a VP Bank, was downbeat, saying:

‘It’s not a nice number. The decline in industrial production in September makes a technical recession almost official now.’

The Euro (EUR) struggled to gain on the Pound (GBP) today, as Germany’s export-reliant manufacturing sector continues to slow down due to business uncertainty around the ongoing US-China trade war and Britain’s planned, but delayed exit from the European Union.

Carsten Brzeski, an Analyst at ING, commented:

‘Even in case of some easing of the current trade conflicts and an end to the Brexit uncertainty, it will probably take until the first quarter of next year to see a significant rebound of German industry.’

GBP/EUR Exchange Rate Steady, BoE Expected to Remain Patient

The Pound (GBP) remained steady against the Euro (EUR) ahead of the Bank of England’s (BoE) interest rate decision this afternoon, which is expected to hold at 0.75%.

Analysts predict that a change to the bank’s monetary policy will be unlikely, though forecasts are for gloomy commentary on the state of the British economy following weeks of political uncertainty, Brexit turbulence and weak data.

Analysts at Reuters commented:

‘The outlook for [BoE Governor Mark Carney] and his colleagues is clouded not only by the continued uncertainty about Brexit but also by Britain’s upcoming election, in which the two main parties are promising varying increases in public spending.’

If Mark Carney acknowledges a weaker global and domestic outlook in his speech, as predicted, we could see Sterling ease against the Euro on heightened fears for the struggling British economy.

British political news will continue to stand front and forward today, with any indication the Tories can further cement their lead in polls ahead of December’s general election likely to boost the Pound as a sense of political certainty returns.

GBP/EUR Outlook: Could the Euro Fall on Weakening German Trade?

Euro investors will be awaiting tomorrow’s release of Germany’s trade balance figure for September, which is expected to hold at €18.1 billion. However, if German trade shows any signs of deterioration, we could see the Euro begin to sink against the Pound on heightened fears for a German recession.

US-China trade developments will also remain in focus, and with any indications that the world’s two largest economies can make a concession on a “Phase 1” trade deal this month could boost optimism in the Eurozone’s economy, which relies heavily on global trade stability.

With no UK economic data due out on Friday, British political developments are likely to continue to drive movement in the GBP/EUR exchange rate into the weekend.