GBP/EUR Exchange Rate Falls on Uptick in Eurozone’s Consumer Confidence
The Pound Euro (GBP/EUR) exchange rate is down today and is currently trading around €1.136 on the interbank market.
The Euro (EUR) gained against Sterling (GBP) following a slight increase in the Eurozone’s consumer confidence for May, which picked up at a seven-month high yesterday, encouraging an increase in consumption for the second-quarter.
However, with the European Elections due to begin tomorrow, many Euro traders are focusing on political developments instead.
French President Emmanuel Macron warned of an ‘existential risk’ to the EU yesterday, seeing the election as treading closely between pro-EU parties and Eurosceptics.
‘I see for the first time collusion between nationalists and foreign interests whose objective is the dismantling of Europe. Deciding not to vote means deciding to give a voice to those who would destroy Europe.’
The Pound, meanwhile, has weakened following Theresa May’s speech yesterday, in which she outlined her ‘new and improved’ Brexit deal. However, this has left many MPs furious on her proposal for a second-referendum should her withdrawal deal pass through Parliament.
GBP/EUR Exchange Rate Slips as on Rising UK Inflation
Sterling failed to gain following the publication of the year-on-year UK CPI figures for April, which increased to 2.1% against March’s 1.9% – although this missed the consensus of 2.2%.
Suren Thiru, the Head of Economics at the British Chambers of Commerce (BCC), said:
‘Rising inflation alongside slowing wage growth is a concern as it squeezes real household incomes. If this trend continues it could well choke off the recent improvement in consumer spending, a key driver of UK growth.’
Today also saw the publication of the UK retail price index figures for April, which came in at a better-than-expected 1.1%.
Brexit news, however, has remained in focus, with MPs increasingly rejecting Theresa May’s ‘last chance’ vote on the UK-EU withdrawal agreement.
Labour’s Brexit Secretary, Sir Keir Starmer, was critical, saying:
‘It’s already pretty clear that it’s heading for a pretty big loss and, frankly, the prime minister would do well just to admit defeat and she should announce today that she’s not going to put the vote because it’s clearly heading in the wrong direction.’
GBP/EUR Outlook: Sterling Could Weaken if MPs Reject PM’s ‘New’ Brexit Deal
Euro investors will be looking ahead to the printing of the flash German Markit Manufacturing PMI figures for May tomorrow, and with a forecast of improvement, this could see the single currency rise higher.
Germany’s GDP figures for the first quarter are expected to remain static at 0.4%.
Tomorrow will also see the release of the flash Eurozone Markit PMI composite figures for May, which, too, are expected to increase.
The Pound Euro exchange rate will likely be driven by ongoing Brexit developments, and as Mrs May’s ‘new’ deal becomes increasing scrutinised, any further signs of MPs rejecting it could weaken Sterling on heightened no-deal fears.