Pound Euro (GBP/EUR) Exchange Rate Flat as UK Government Spending Falls to 17-Year Low
The Pound Sterling Euro (GBP/EUR) exchange rate remained muted, and the pairing is currently trading at an inter-bank rate of €1.1539.
Data revealed that UK government borrowing fell to its lowest annual level in 17 years.
During the 2018-2019 financial year, borrowing was £24.7 billion, £17.2 billion less than the previous year.
However, despite the fall, the amount was still higher than the Office for Budget Responsibility forecast from last month.
Euro (EUR) Muted as German Business Climate Falls
This morning, the single currency was likely dampened following a slew of disappointing data from the Eurozone’s largest economy.
The German IFO index that measures expectations for the next six-months fell from 95.6 to 95.2, and business climate slipped from 99.7 to 99.2.
Commenting on this, Chief Europe Economist at Capital Economics Andrew Kenningham said:
‘While this is not a big fall, the detail is consistent with the negative message from Markit’s Manufacturing PMI, released last Friday, which showed that manufacturing, and particularly the new export orders component, remained very weak.
‘Indeed, the manufacturing components of the IFO business climate index dropped from 6.7 to 4.0, whereas the services and construction components both rose slightly. The business expectations index published by CES IFO today is consistent on past form with manufacturing output contracting by around 2% year-on-year.
‘This is consistent with our view that Germany’s economy is likely to grow at a very anaemic pace this year, even if there is a slight pick-up in GDP growth in Q1.’
Pressure for PM to Resign Leaves Sterling (GBP) Flat
On Tuesday reports emerged that pressure was being put on Theresa May to resign as Prime Minister.
Last night, the 1922 Committee of backbench Conservatives failed to reach a decision on a rule change to how often a motion of no-confidence in a leader can be brought before the House of Commons.
While some members of the committee want May to name the date of her departure, others are skeptical of a long term rule change to address such a specific circumstance.
Many are also worried about further party divisions ahead of the potential European elections on 23 May.
Pound Euro Outlook: Will the GBP/EUR Exchange Rate Rise on Disappointing German Consumer Confidence?
Looking ahead to Thursday, the Euro (EUR) could fall against the Pound (GBP) following the release of Germany’s GfK consumer confidence survey.
If consumer confidence falls in May as it did in April, sentiment in the single currency could be dampened.
Meanwhile, cross-party discussions are due to continue which could weigh heavily on Sterling.
If there are further reports that the Conservatives are refusing to shift on its ‘red lines’, the Pound Euro (GBP/EUR) exchange rate could fall.