GBP/EUR Exchange Rate Slumps as No-Deal Risks Rise
The Pound Euro (GBP/EUR) exchange rate remains on the defensive this morning as no-deal Brexit fears continue to batter Sterling sentiment.
At the time of writing the GBP/EUR exchange rate is currently down around 0.3% below this morning’s opening rate, leaving the pairing trading at around €1.0930, just short of a two-year low.
Pound (GBP) Threatens to Strike One-Year Low as Boris Johnson Maintains Hard-Line Brexit Stance
Following on from the Pound’s (GBP) collapse of over a cent against the Euro (EUR) yesterday, Sterling continues to extend its losses this morning amid rising fears that the UK is hurtling towards a no-deal Brexit.
This has seen the GBP/EUR exchange rate drop dangerously close a two-year low as Boris Johnson seeks to harden his stance on Brexit, refusing to negotiate a deal with the EU until it is willing to drop the Irish backstop.
However analysts warn that the EU will almost certainly call Johnson’s bluff, and refuse to offer any deal with any substantial changes from the one previously negotiated with Theresa May, with this deadlock expected to drive the Pound even lower.
Kit Juckes, Chief foreign exchange strategist at Société Générale
‘[Johnson] is committed to a hard-line stance towards the EU that will of course, be rebuffed aggressively. In the process, Sterling moves to the bottom of its post-referendum ranges and re-tests historical trade-weighted lows.’
On top of Sterling’s Brexit woes, the Pound faces the threat of a dovish Bank of England (BoE) placing even more pressure on the Pound later on in the week, which may be enough to push the GBP/EUR exchange rate to a new post-referendum low.
GBP/EUR Exchange Rate Forecast: Will Slowing Eurozone GDP Trim the Euro’s Gains?
While UK political developments are likely to remain a key catalyst of movement in the Pound Euro (GBP/EUR) exchange rate for the remainder of the week, the publication of some high profile Eurozone data is also likely to influence the pairing.
This may see the Euro relinquish some ground against Sterling in the mid-week as the Eurozone’s GDP reading is expected t to confirm that economic growth in the bloc slowed in the second quarter.
This will be accompanied by the Eurozone’s latest CPI figures, which could exert more pressure on the single currency as economists forecast that inflation in the bloc will have retreated to a new one-year low in July.
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