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Euro to Pound Sterling Exchange Rate Outlook Rises as Trade and Brexit Uncertainties Mount

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Euro to Pound Exchange Rate Sustains Recovery from Last Week’s Losses

Thanks to some solid Eurozone data this week, the Euro to Pound Sterling (EUR/GBP) exchange rate is on track to have sustained most of this week’s gains. The week has seen the pair recover all the losses it suffered last week as Brexit hopes are doused.

After opening this week at the level of 0.8518, EUR/GBP put in solid and steady gains of over a cent throughout the week. At the time of writing today, EUR/GBP was trending closely to the level of 0.8635.

While EUR/GBP has been unable to hold last night’s weekly high of 0.8645, the pair still recovered almost all of the losses seen last week.

The Euro (EUR) has more easily been able to sustain a recovery against the Pound (GBP), as Pound investors begin to increasingly doubt that any optimistic Brexit developments are likely over the next few months.

Euro (EUR) Exchange Rates Firm amid Hopes of Eurozone Economic Strength

A combination of domestic and global factors has bolstered demand for the Euro this week, helping the shared currency to capitalise on the Pound’s weakness and recover all of the losses seen in the previous week.

Recent Eurozone ecostats, particularly those from Germany, have indicated that the bloc’s economic slowdown at the beginning of this year may not have been as bad as expected.

German industrial production and trade data from March have beaten forecasts in the latest datasets, bolstering hopes about German economic resilience, and speculation that the Eurozone’s biggest economy may have grown more than feared in Q1.

This morning’s German trade stats confirmed that while imports fell slightly short of expectations, exports surged to an unexpectedly strong 1.5% rather than the forecast -0.3%.

On top of these domestic stats, the Euro outlook has been supported by speculation that worsening US-China trade tensions could impact the US economy and pressure the Federal Reserve to cut US interest rates.

As Fed interest rate cut bets rise, the Euro strengthens.

Pound (GBP) Exchange Rates Slump as Investors Doubt Brexit Breakthrough

While the Pound surged at the end of April on hopes that cross-party Brexit talks could lead to softer Brexit deal being reached and succeeding to pass through Parliament, those hopes were short-lived.

This week, as the ruling Conservative Party and opposition Labour Party begin to turn priorities towards the upcoming EU elections, markets are becoming increasingly doubtful that any deal can be reached.

Analysts were already doubtful that the talks would lead to any resolution on Brexit, and now they are more confident in predictions that there is still months of Brexit uncertainty ahead.

For now, Pound investors are looking ahead to the EU elections amid uncertainty over how the major parties will perform in them. The Sterling outlook is also being pressured by concerns that UK Prime Minister Theresa May could soon be pressured to step down.

Euro to Pound (EUR/GBP) Exchange Rate Investors Anticipate Major German Data

The Euro to Pound (EUR/GBP) exchange rate outlook is higher after this week, but it could still be knocked again in the coming week if upcoming major German data disappoints investors.

Major Eurozone ecostats will be published throughout the week and are likely to be the primary cause of EUR/GBP movement, amid expectations that there will not be any major Brexit news.

German inflation, Eurozone industrial production, and ZEW economic sentiment stats for both Germany and the Eurozone will come in on Tuesday.

These will be followed on Wednesday by Gross Domestic Product (GDP) growth rate estimates for Germany and the Eurozone for Q1 2019. German wholesale prices and Eurozone inflation will round the week off on Friday.

If German data continues to show signs of being more resilient than feared, EUR/GBP may see further gains as investors become more confident that the Eurozone economy has weathered a slowdown.

If inflation data beats expectations it is also likely to benefit the Euro to Pound (EUR/GBP) exchange rate outlook, as they may lead to higher European Central Bank (ECB) interest rate hike bets.