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Pound Sterling Euro (GBP/EUR) Exchange Rate Muted on Brexit Pessimism and Sliding German Consumer Confidence

Pound Euro (GBP/EUR) Exchange Rate Muted as German Consumer Confidence Falls

The Pound Sterling Euro (GBP/EUR) exchange rate was muted, and the pairing is currently trading at an inter-bank rate of €1.1693.

This morning, data revealed that April’s GfK German consumer confidence was dented, slipping from the downwardly revised 10.7 to 10.4, adding to fears the Eurozone’s economy is slowing.

Germany’s economy has been struggling for several months, and GfK researcher Rolf Buerkl explains:

‘Whilst consumers are certainly not assuming that Germany will fall into a recession this year, they do see a noticeable cooling off of economic activity.

‘[…] The lack of decisiveness regarding the nature and date of the UK’s exit from the EU, as well as the growing trade conflict between the EU and USA are clearly creating ever more uncertainty among consumers. Barriers to trade, such as increases in customs duties, are currently creating a burden for German exports.’

French industrial confidence also slipped to its lowest level in close to two-and-a-half years this morning, which likely further dampened sentiment in the single currency.

Sterling (GBP) Flat as UK Mortgage Approvals Slide to Six-Year Low

Later this morning, data revealed that UK mortgage approvals slumped to a six-year low, leaving the pairing remaining muted following this data release.

Industry body, UK Finance found that just 35,299 new loans for house purchases were agreed in February, down from 39,555 the previous month.

This could show that potential buyers are avoiding buying until Brexit is resolved or they are unable to move due to a lack of funds.

Increased Likelihood of ‘Soft’ Brexit Leaves Pound (GBP) Muted

Theresa May confirmed on Monday that her Brexit withdrawal agreement would not be put before the House of Commons for a third ‘meaningful vote’ due to a lack of support.

Later on, MPs voted to take control of the parliamentary timetable in order to find a majority for any Brexit option.

MPs voted by 329 to 302, and the Prime Minister’s defeat is likely to lead to a ‘soft’ Brexit that keeps the UK closer to the European Union.

After voting against the government, three government Ministers – Alistair Burt, Richard Harrington and Steve Brine – resigned.

It is likely that Brexit uncertainty weighed on Sterling (GBP), leaving the pairing muted as disappointing data from the Eurozone dampened sentiment in the Euro (EUR).

Pound Euro Outlook: Will the GBP/EUR Exchange Rate Slip on a Dovish Draghi?

Looking ahead to Wednesday, it is likely the Euro (EUR) could slide against the Pound (GBP) following a speech from the President of the European Central Bank (ECB), Mario Draghi.

If Draghi’s tone is considerably dovish and he adds to the fears that the Eurozone’s economy is slowing, it could weigh on the single currency.

Due to an absence of UK economic data releases, Brexit is likely to remain the main catalyst for movement of Sterling.

Tomorrow MPs are due to vote on alternatives to the Prime Minister’s Brexit deal, with the options likely to include staying in the EU customs union, holding a second referendum, no-deal and revoking Article 50.

If options such as revoking Article 50 gain a lot of support, it is likely the Pound Euro (GBP/EUR) exchange rate will rise.