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Pound Euro (GBP/EUR) Exchange Rate Steady as Eurozone’s Growth Narrowly Avoids Stagnation

European Central Bank

GBP/EUR Exchange Rate Rangebound, German Economy Continues to Struggle

The Pound Euro (GBP/EUR) exchange rate held steady today, with the pairing currently trading around €1.202 after the Eurozone’s flash GDP report for the fourth-quarter narrowly avoided stagnation at 0.1%.

Today also saw Germany’s preliminary GDP report for 2019’s final quarter stall at 0%, leaving markets hesitant to trade in the Euro (EUR) as near-term recession fears continue hang over the bloc’s largest economy.

Carsten Brzeski, an economist at ING, was downbeat in his analysis of today’s data, saying:

‘Looking ahead, the latest soft indicators and industrial data for December do not bode well for the short-term outlook. Also, the impact from the coronavirus on the Chinese economy is likely to delay any rebound in the manufacturing sector as it at least temporarily disrupts supply chains.’

Euro (EUR) investors are also feeling increasingly jittery over China’s coronavirus epidemic as fears that this could have a negative impact on the global supply chain and further hinder Germany’s already delicate economy.

GBP/EUR Exchange Rate Steady, March Budget Hopes Continue to Rise

The Pound (GBP) has remained relatively steady against its peers today following Prime Minister Boris Johnson’s post-Brexit cabinet reshuffle yesterday, which saw former Chancellor Sajid Javid to be replaced by Rishi Sunak.

Paul Dales, Chief UK Economist at Capital Economics, was optimistic in his analysis, commenting:

‘We already thought that the Budget on 11th March would involve an extra loosening in fiscal policy worth 0.5% of GDP, which coming on top of the extra government spending announced in September 2019 would mean a fiscal boost of 1.0% is in the pipeline.’

‘It’s now possible that the Budget will provide a bigger bang.’

Now that March’s budget is expected to be increased – as Downing Street now has increased control over its public spending next month – Sterling traders have become increasingly optimistic that this may have a positive impact on the British economy going forward.

GBP/EUR Outlook: Could No-Deal Brexit Fears Continue to Haunt British Markets?

Euro (EUR) investors will be looking forward to Monday’s Eurogroup meeting, which will be attended by the Finance Ministers of each state of the Euro area. Any dovish commentary on the future of the bloc’s economy, however, would prove Euro-negative.

The GBP/EUR exchange rate will continue to be influenced by Brexit news next week, with any further indications that the EU could harden its negotiations with the UK threatening a no-deal following the ‘transition period’ and weakening market appetite for the Pound.