Pound to Euro Exchange Rate Recovers Half of Last Week’s Losses
Despite a lack of fresh news supporting the Pound (GBP), the Pound Sterling to Euro (GBP/EUR) exchange rate rebounded strongly from half-month-lows yesterday. The pair advanced more easily thanks to broad weakness in the Euro (EUR).
The Pound was so weak last week that it even fell against the Euro, and GBP/EUR tumbled from 1.1317 to 1.1233 throughout.
When markets opened yesterday though, GBP/EUR saw a jump in demand as investors bought the Pound back slightly from its selloff, and the pair has sustained most of those gains due to deepening Euro losses.
At the time of writing on Tuesday, GBP/EUR trended close to the level of 1.1270.
Pound (GBP) Exchange Rates Remain Resilient in Anticipation of Brexit Plan
Investors sold the Pound en masse last week, as the reconvening of UK Parliament was not the boost for the Brexit outlook that some had hoped for amid continued clashes between MPs.
The Pound rebounded when markets opened yesterday, as investors bought it back from cheap levels from last week’s selloff, and so far today the British currency has been able to hold most of those gains.
Investors are hesitant to sell the Pound again just yet, amid a lack of fresh reasons to sell ahead of anticipated Brexit news.
According to reports, the UK government is expected to unveil more details of its Brexit plans in the coming days, including proposals for how to handle the contentious Irish backstop issue.
Still, some analysts speculate that traders may be once again too optimistic, and the threat of a no-deal Brexit at the end of this month still looms large over the Pound outlook.
Euro (EUR) Exchange Rates Fail to Find Support amid Deep Manufacturing Contractions
Following last week’s mixed Eurozone data, and yesterday’s German data continuing to indicate weakness in Germany’s economy, today’s Eurozone stats did little to reassure investors about the Eurozone’s economic outlook.
Markets have become more anxious about the possibility that Germany is in recession, and there has been little else offering the Euro any support lately leaving the currency overall highly unappealing.
As a result, this morning’s Eurozone manufacturing PMI results from Markit just weren’t enough to improve the outlook.
While Germany’s final September manufacturing PMI beat projections, it was only slightly and the figure still came in with a shockingly deep contraction of 41.7.
On top of that, France’s final September manufacturing PMI actually fell short at 50.1, worryingly close to stagnation. Overall, the Euro was unable to recover much against the Pound.
Pound to Euro (GBP/EUR) Exchange Rates Await Brexit Developments and Services Stats
There are some more key Eurozone ecostats due towards the end of the week. Services and composite PMI data from Markit will be published on Thursday, as will the Eurozone’s August retail sales report.
German construction PMI data, due Friday, may also prove influential.
However, unless these upcoming stats are highly impressive and give investors reason to believe that the Eurozone economy is showing more solid signs of recovery, the Euro is unlikely to find much reason to strengthen this week.
Instead, the biggest chances for shifts in Pound to Euro exchange rate movement will likely be UK politics and Brexit news.
With the current Brexit date now under a month away and still no sign of whether Brexit will end with a deal, no-deal, or will be delayed again, it is likely to be a highly pivotal and chaotic October for Sterling.
The Pound to Euro (GBP/EUR) exchange rate could advance if the UK government’s Brexit plans are convincing, but if the plans fail to impress negotiators as expected then the pair may be in for fresh losses instead.