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Pound Euro Exchange Rate Steady as UK Public Borrowing Strikes 17-Year Low

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GBP/EUR Exchange Rate Stable Following UK Borrowing Figures

The Pound Euro (GBP/EUR) exchange rate is trading sideways this morning, as markets digest the UK’s latest public borrowing figures.

At the time of writing the GBP/EUR exchange rate is virtually unchanged from its opening rates this morning, holding close to a six-week low at around €1.15.

Pound (GBP) Steady in Wake of UK Borrowing Figures

The Pound (GBP) is rangebound against the Euro (EUR) and many of its other peers this morning, following the publication of the UK’s public borrowing figures.

According to data published by the Office for National Statistics (ONS) the UK ran a budget deficit of £0.84bn in March, missing expectations of a £0.4bn surplus after the government borrowed £1.3bn more than forecast to balance the books.

However despite, missing expectations last month, the data revealed that the UK budget deficit hit a 17-year low over the last financial year, with UK borrowing having fallen to £24.7bn, and leaves the government on track to eliminate the budget deficit by 2020.

While this provides Chancellor Philip Hammond with some wriggle room when it comes to spending, the Chancellor has previously warned that his hands will remain tied until the cloud of Brexit uncertainty has cleared.

GBP/EUR Exchange Rate Forecast: Will Eurozone GDP Have Slowed in the First Quarter?

Looking ahead, barring any major Brexit developments, the next major shift in the Pound Euro (GBP/EUR) exchange rate is likely to be driven by the upcoming release of the Eurozone’s first quarter GDP estimate.

Economists forecast the preliminary GDP reading will confirm fears that Eurozone growth slowed to a crawl in the first quarter, slipping from 0.2% to just 0.1%.

With April’s data so far failing to inspire confidence that growth will rebound in the second quarter, we could see a sharp drop in the Euro next week as it fuels concerns that a prolonged slowdown in the Eurozone will result in the European Central Bank (ECB) potentially keeping rates on hold until at least 2021.

In the meantime GBP investors are likely to focus on Confederation of British Industry’s (CBI) industrial orders data, with a slight uptick in orders in April potentially fueling some modest gains in Sterling.