Pound to Euro Exchange Rate Avoids Losses despite Brexit Uncertainties
The Pound (GBP) has seen wide fluctuations since markets opened this week, with Brexit speculation briefly pushing the Pound Sterling to Euro (GBP/EUR) to its best levels all year before sending it tumbling again. Sterling trade steadied today ahead of further Brexit developments.
After opening this week at the level of 1.1584, GBP/EUR briefly surged on Brexit speculation to touch a yearly high of 1.1767 on Monday night. This was the best GBP/EUR level in over a year and a half, since 2017.
Since then though, soft Brexit hopes were slightly doused and GBP/EUR slipped back to nearer the week’s opening levels again.
At the time of writing this morning, GBP/EUR was trending around half a cent higher, near the level of 1.1637 due to market expectations that the upcoming Parliament vote would show MPs were against a possible worst-case scenario no-deal Brexit.
Pound (GBP) Exchange Rates Sturdier on Hopes of No-Deal Brexit Being Avoided
Demand for the Pound has been all over the place this week. Speculation that the government’s soft Brexit plan could pass left the currency stronger briefly, before doubts that the latest UK-EU talks changed much left Sterling weaker again.
With the government’s UK-EU Brexit withdrawal deal little-changed over the last few months, analysts were unsurprised that the government deal saw yet another large defeat in Parliament during the meaningful vote last night.
Since then, the Pound’s movement has steadied a little.
While the government’s soft Brexit deal appears to be dead, there is still wide expectation that MPs will vote against a no-deal Brexit and vote in favour of delaying the formal Brexit date during votes in the coming days.
This has left the Pound relatively buoyed, though volatility depending on how these Brexit votes unfold is widely expected.
Euro (EUR) Exchange Rate Losses Limited as Eurozone Industrial Production Beats Forecasts
The Pound has been driving Pound to Euro exchange rate movement this week, and the Euro’s strength has been relatively low-influence in comparison.
However, the shared currency did avoid deeper losses versus a firming Pound today as investors were impressed by Eurozone data.
After disappointing stats in December, the Eurozone’s January industrial production results beat forecasts today and lightened from -4.2% to -1.1% year-on-year. The monthly figure rebounded strongly from -0.9% to 1.4%.
The jump in production was caused largely by stronger energy output and stronger data from France and Italy.
It followed stronger than expected German trade data from the beginning of the week, and bolstered hopes that the Eurozone economic outlook was seeing an optimistic turn after months of worsening slowdown.
Pound to Euro (GBP/EUR) Exchange Rate Outlook Depends on Brexit Developments
GBP/EUR has been volatile in recent sessions, but with more major Brexit developments and Eurozone ecostats expected in the coming days the pair could be in for more significant movement.
Of course, the biggest driver of currency markets this week so far has been Brexit news. With the UK government’s negotiated Brexit plan being essentially sunk in Parliament for the second time, the outlook for the process has already changed.
Markets are currently pricing in a formal delay for Brexit as being the most likely outcome of this week’s Parliamentary Brexit votes. A vote on no-deal Brexit will be held today, followed by a Brexit delay vote tomorrow if MPs reject a no-deal Brexit.
In this situation, Sterling would find support from hopes of a no-deal Brexit being avoided – but uncertainty over how the process will unfold from here would keep Sterling from strengthening too much.
The Euro, on the other hand, could see a shift in movement if tomorrow’s key German and French inflation rate stats from February surprise investors.
If German inflation beats forecasts it could make investors more confident about Eurozone price pressures and the Euro would see stronger support, potentially pushing the Pound to Euro (GBP/EUR) exchange rate lower.