Limited GBP/EUR Exchange Rate Movement Seen after Brexit News
The Pound (GBP) has traded in a narrow range against the Euro (EUR) today, with background uncertainties about Brexit limiting Pound Sterling demand.
While the pairing has made little movement today, in the broader picture the GBP/EUR exchange rate is near its lowest level since early October.
Brexit has once again been in the headlines today, with GBP traders processing Monday’s speech from Prime Minister Theresa May.
The PM stated that Brexit talks were ‘95%’ complete and that the UK had proposed a new customs arrangement to the EU, in a bid to get talks moving again.
While the 95% estimate has supported the Pound today, the fact that the remaining 5% is the issue of the Irish border has limited upwards GBP movement.
Finding a border and trading solution that satisfies all parties has proven to be an extremely difficult task, so GBP trader are perhaps justified in their caution today.
Euro to Pound (EUR/GBP) Exchange Rate Steady as Italian Budget Crisis Rumbles On
In a recurrent situation, the Euro (EUR) has traded tightly against the Pound (GBP) today because of continued problems associated with Italy’s budget submission.
The Italian government submitted a budget to the European Commission (EC) a few weeks ago and the current fear is that this will be rejected by EC officials.
If the EC does enact an Excessive Deficit Procedure against Italy then the Euro could fall sharply against the Pound and other currency peers.
Italy’s government has pledged to keep the Euro as its national currency and remain in the European Union, but EUR traders are still wary about a budget rejection.
Pound Euro Exchange Rate Forecast: Will GBP/EUR Rise on BoE Governor’s Speech?
Looking ahead, the next UK event that could influence the Pound to Euro (GBP/EUR) exchange rate will be a speech from Bank of England (BoE) Governor Mark Carney.
Before this speech is made, however, the Euro could fall against Pound Sterling when a Eurozone consumer confidence estimate comes out today.
Current expectations are for growing consumer pessimism to be reported, with a shift from -2.9 points to -3.2 anticipated.
A forecast-matching decline could limit demand for the Euro, as lower levels of confidence could lead to reduced spending and retail sales activity.
Getting back to the BoE, Mr Carney is due to give remarks this afternoon at the University of Toronto on ‘Machine Learning and the Market for Intelligence’.
While this topic doesn’t easily lend itself to a discussion of interest rates, Mr Carney could still spark GBP/EUR volatility by mentioning monetary policy.
If the BoE Governor does discuss interest rates and backs a rate hike in 2019 then the Pound could rise sharply against the Euro.
Beyond today’s remaining ecostats, Wednesday morning will bring high-impact Eurozone PMI readings that could also cause EUR/GBP exchange rate losses.
German and Eurozone manufacturing and services sector activity is predicted to slow, which could unsettle Euro traders and cause a midweek GBP/EUR exchange rate rise.