Euro to Pound Sterling Exchange Rate Trends near Monthly Lows despite Brexit Uncertainties
Uncertainty over how the Brexit process will unfold over the final month before the formal Brexit date is keeping demand for the Pound (GBP) limited, but despite this the Euro to Pound Sterling (EUR/GBP) exchange rate is trending near its worst levels.
Last week, a rise in hopes that a soft Brexit could be achieved led to a rise in demand for the Pound. This caused EUR/GBP to tumble from the level of 0.8760 to the level of 0.8680 throughout the week – almost a pence.
Thanks to weakness in its rival the US Dollar (USD), the Euro (EUR) has been able to hold above last week’s worst EUR/GBP levels of 0.8669. This was also the worst EUR/GBP level since January.
Still, ultimately EUR/GBP remains near its worst levels as investors buy the Pound on the possibility of major Brexit developments in the coming weeks.
Euro (EUR) Exchange Rates Edge Higher on US Dollar (USD) Weakness, Budget Hopes
Despite recent Eurozone data continuing to indicate that the Eurozone’s economic outlook is slowing, the Euro has been able to avoid further losses thanks to other factors.
The US Dollar (USD) has been unappealing amid market demand for riskier trade-correlated currencies, due to optimistic US-China trade developments.
As the US Dollar is the Euro’s biggest rival and the two often see a negative correlation, this weakness in the US Dollar has led to some stronger support for the Euro.
On top of this, news that France and Germany had agreed to a joint proposal for a Eurozone budget also bolstered demand for the shared currency in recent sessions.
Pound (GBP) Exchange Rates Avoid Losses on Speculation of Brexit Delay
While the Pound was briefly unappealing on the weekend’s news that the UK government had delayed the next meaningful Parliament vote on its Brexit plan, demand for Sterling rose again today.
Fresh rumours that the UK government was considering delaying the formal Brexit date, combined with speculation that the EU could delay Brexit for two years into 2021, made investors hesitant to sell the Pound too much today.
Rumours suggest that the government could delay Brexit, if UK Prime Minister Theresa May is not able to push her Brexit plan through Parliament during the next vote on the 12th of March.
If the Brexit date is delayed it will offer significant relief to investors fearing a No-deal Brexit, perceived as the worst possible outcome.
Euro to Pound (EUR/GBP) Exchange Rate Outlook Would Slump on Further Signs of Brexit Delay
Demand for the Euro is a little stronger on US Dollar (USD) weakness and Eurozone budget hopes, but the Euro to Pound (EUR/GBP) exchange rate could be in for further losses if there are optimistic Brexit developments in the coming week.
The Euro’s strength is limited due to slews of weak Eurozone data in recent weeks, leaving it volatile to potential gains in Sterling.
If there is any further indication that the UK government will delay Brexit or take other measures to avoid a No-deal Brexit, the Pound could see a surge in demand on market relief.
On the other hand though, if there are no developments on Brexit any time soon, No-deal Brexit fears could worsen with the formal Brexit date now just over a month away.
In the coming sessions, EUR/GBP could also be influenced by shifts in Euro demand.
German confidence data tomorrow, Eurozone confidence stats on Wednesday and other key German data due towards the end of the week could drive movement in the Euro to Pound (EUR/GBP) exchange rate if they surprise investors.