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Pound Sterling Euro (GBP/EUR) Exchange Rate Rallies on Hopes of Cabinet Brexit Breakthrough

Weakening Industrial Orders Fail to Weigh Down Pound Sterling Euro (GBP/EUR) Exchange Rate

Another deterioration in the CBI industrial trends orders index was not enough to keep the Pound Sterling to Euro (GBP/EUR) exchange rate from returning to an uptrend today.

Although the index dropped from -5 to -10 on the month this was quickly overshadowed by news of a potential breakthrough on Brexit.

Reports that Theresa May had secured cabinet support for the concept of a temporary customs relationship and a series of other compromises on Brexit saw Pound Sterling (GBP) rally.

While it remains to be seen whether MPs in general will support this new Brexit proposal investors were happy to pile into GBP exchange rates at the suggestion of progress.

An improvement in the Eurozone consumer confidence index failed to shore up the Euro (EUR), meanwhile, as worries over the economic outlook persist.

After the OECD revised down its German growth forecast for 2019 markets saw limited incentive to favour the single currency.

Pound Sterling (GBP) Exchange Rates Brace for UK Inflation Figures

The mood towards the Pound could sour once again tomorrow, however, with the release of the latest UK consumer price index data.

Although the headline inflation rate looks set to accelerate from 1.9% to 2.2% on the year this may not give GBP exchange rates any fresh support.

Given the ongoing sense of political uncertainty dominating the domestic outlook the Bank of England (BoE) seems set to remain on hold for the foreseeable future.

With wage growth already showing signs of slowing the prospect of a further uptick in price pressures could weigh heavily on demand for the Pound.

On the other hand, if inflation fails to rise as forecast this could encourage the GBP/EUR exchange rate to extend its gains further.

Any fresh signs of weakness within the UK economy, though, may still diminish the appeal of the Pound in the days ahead.

Euro (EUR) Exchange Rates Set to Slide on ECB Commentary

EUR exchange rates, meanwhile, appear vulnerable ahead of the latest commentary from European Central Bank (ECB) President Mario Draghi.

Markets anticipate another relatively cautious message from Draghi, keeping the central bank on track to leave interest rates on hold for the remainder of the year.

Even so, if Draghi expresses anxiety over the outlook of the Eurozone economy this could expose the Euro to a fresh bout of selling pressure.

Any signs that the ECB is shifting towards a more positive stance, on the other hand, may see the single currency rally against its rivals in the short term.

Anxiety over the health of the global economy may also weigh on EUR exchange rates this week, particularly if trade tensions between the US and China show fresh signs of flaring up.