GBP/EUR Steadies as Brexit Developments Pause Over Festive Season
The Pound Euro (GBP/EUR) exchange rate is holding steady today and trading in the region of €1.1116 as Brexit headlines recede ahead of the festive season.
The House of Commons will continue Brexit debates on 7th January, with Prime Minister Theresa May set to renew efforts to gain support for her UK-EU withdrawal agreement.
‘The sooner MPs agree the right Brexit deal, the sooner we can all get back to dealing with those issues and building a country that works for everyone.’
The Euro (EUR) has also steadied today with the announcement that the Italian senate has signed off on Italy’s 2019 budget, soothing concerns after months of disputes between the European Commission and Rome.
Pound Euro (GBP/EUR) Exchange Rate Range Bound as Political Tensions Ease
While an absence of Brexit headlines is keeping Sterling steady, the Pound also found support against the Euro (EUR) following the release of the UK’s Q3 GDP figures on Friday, which showed growth of 0.6% on the quarter.
These were followed by the UK’s public sector net borrowing figures for November, which showed that government borrowing in the year to date reached its lowest level for 16 years. Borrowing in November also came in below forecasts.
These results helped the Pound shake off the impact of Friday’s UK Gfk consumer confidence figures. The sentiment index eased from -13 to -14, continuing its decreasing trend and dampening market confidence.
With no further UK data releases until Friday, the Pound is set to remain in a fairly steady as political tensions and market volatility ease over the holiday period.
EUR/GBP Exchange Rate Stabilises as ‘Yellow Vest’ Protests Ease in France
Euro (EUR) exchange rates gained last week on the news of Italy’s capitulation over its controversial budget, with Rome agreeing with the EU to reduce its budget deficit for 2019 from 2.4% to 2.04%.
Germany’s latest Gfk consumer confidence figures also showed a better-than-expected improvement in sentiment.
Euro (EUR) exchange rate gains were clipped however by Friday’s Eurozone’s consumer confidence figures for December which showed a worse-then-expected decrease to -6.2.
In France, meanwhile, the pressure of six weeks of protests from the ‘yellow vests’ movement has eased slightly as the holiday season approaches.
French President Emmanuel Macron commented:
‘Order and calm and harmony must reign now. Our country needs this. It needs concord, unity and sincere engagement. Divisions must be soothed.’
GBP/EUR Outlook: Brexit and French Political Upheaval to Remain in Focus
The GBP/EUR exchange rate is likely to be driven by political rather than economic forces in January, with Brexit debates warming up after the return of the House of Commons on 7th January, and Theresa May attempting to bolster support for her divisive Brexit agreement.
EUR traders will also be paying close attention to Brexit developments, with the UK Parliament due to vote on May’s UK-EU withdrawal agreement in January.
This week will see the publication of the UK’s mortgage approvals figures for November, with any signs of an increase giving Sterling a little support.
These will be followed by the UK’s manufacturing production figures for November, with Sterling traders paying close attention to any signs of a decrease in output.
The Euro, meanwhile, may be offered a leg-up against the Pound with the release of Germany’s consumer price index for December, which is expected to show an increase in price pressures.
The GBP/EUR exchange rate will likely arrive into a turbulent New Year with the expected renewal of Brexit discussions and lingering political tensions in France causing fluctuations in both currencies.