Pound Euro (GBP/EUR) Exchange Rate Muted as UK in ‘Pretty Good Shape’ to Cope with No-Deal
The Pound Sterling Euro (GBP/EUR) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of €1.1220.
On Friday, Cabinet Secretary Sir Mark Sedwill said that there had been ‘a lot of preparation’ for a no-deal Brexit.
Sedwill also noted that the government was in ‘pretty good shape’ to cope with the event of a no-deal Brexit
Sir Mark Sedwill stated:
‘We have got the government in pretty good shape and public services in pretty good shape for it.’
This likely provided the UK currency with a slight upswing of support, however the pairing remained muted on Friday morning.
However, while front-runner Boris Johnson stated he was ‘not aiming for a no-deal outcome’, the MP’s outcome in the first ballot in the Tory leadership contest likely increased the risk of this outcome.
Johnson received 114 votes, significantly ahead of second place Jeremy Hunt who managed to get 43 votes.
Euro (EUR) Flat as EU Hardens Stance against Italy
Meanwhile, the European Union has stepped up the pressure to bring Italy into line with fiscal rules.
After data showed that Italy had failed to meet budget targets that had been softened in December, the EU is hardening its stance.
Speaking to reporters, President of the Eurogroup and Chair of the Board of Governors of the European Stability Mechanism, Mário Centeno said:
‘It is important to keep up with the commitments.
‘[Reducing Italy’s debt] is the utmost importance for growth, for the stability of the Eurozone.’
However, Italian Finance Minister Giovanni Tria stated that the new data that showed the country’s deficit had lowered which meant additional measures were not needed.
He also added that he wanted to find a compromise with the EU, and if necessary was prepared to improve public finances.
Pound Euro Outlook: Will a Dovish UK Inflation Report Weigh on GBP?
Looking ahead to Monday, it is likely the Pound (GBP) could slide against the Euro (EUR) following the release of the inflation report hearings.
If the Bank of England reveal that inflation is likely to miss the bank’s target, it could dampen sentiment in Sterling.
Meanwhile, the Euro could rise following the release of the Eurozone’s labour cost.
If labour cost in the first three months of 2019 rises higher than forecast, it could cause the Pound Euro (GBP/EUR) exchange rate to rise.