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Pound Euro (GBP/EUR) Exchange Rate Forecast: More Brexit Woes in Store for Sterling?

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GBP/EUR Exchange Rate Dips as Holyrood Blocks Brexit Bill

The Pound Euro (GBP/EUR) exchange rate is trending lower this morning as concerns over Brexit returned to drag on the UK currency.

At the time of writing GBP/EUR exchange rate is down around 0.2%, with the pairing slipping back from the weekly high struck overnight on Tuesday.

Pound (GBP) Exchange Rate Edges Lower as Attention Turns to Brexit

The Pound (GBP) exchange rate is tumbling this morning as investors begin to raise concerns over Brexit once again.

This comes in the wake of the Scottish Parliaments refusal to give consent to the UK’s EU Withdrawal bill.

While it is not clear this will prevent the bill being pushed through by Westminster, it has brought Brexit back into the spotlight for investors.

In particular it appears to be the government’s continued struggle to settle a debate about managing post-Brexit customs that has spooked investors, with the resulting uncertainty prompting Sterling sentiment to dip this morning.

Euro (EUR) Investors Await Inflation Report

Meanwhile markets are bracing for a potential fall in the Euro (EUR) exchange rate, following the final release of last month’s Eurozone CPI data, as they wait to see if it confirms that Eurozone inflation slipped back in April.

April’s preliminary CPI reading revealed headline inflation slipped from 1.3% to 1.2%, with the accompanying core figures showing underlying inflation slumped from 1% to 0.7%.

This is a significant worry for EUR investors as it suggests that last month’s weakened inflation figures were only being propped up by the recent surge in oil prices.

Most importantly however is that this will leave inflation well short of the European Central Bank’s (ECB) target rate of 2%, something which may be a point of concern for ECB President, Mario Draghi as he speaks later today.

GBP/EUR Exchange Rate Forecast: Rising Inflation to Lift Sterling?

Looking ahead a little further ahead the GBP/EUR exchange rate could look to rally later this month with the publication of the UK’s own CPI figures for April.

Economists currently forecast inflation may have ticked up again last month, potentially strengthening the Pound (GBP), as it bolsters the odds of a rate hike from the Bank of England (BoE) later this year.

Meanwhile the latest Eurozone PMI figures may drag on the Euro next week as they are expected to continue to indicate that the bloc is running out of momentum in 2018.