Pound to Euro Exchange Rate Edges Away from Worst Levels Once Again
After briefly attempting to advance yesterday, the Pound Sterling to Euro (GBP/EUR) exchange rate only tumbled again in the evening. The pair hit fresh lows overnight and was once again attempting to recover slightly from lows today.
Since opening this week at the level of 1.1992, GBP/EUR has been trending with a downside bias.
Pound (GBP) investors were hit with a reality check that a no-deal Brexit is still a possible outcome to the process, causing the currency to plummet. GBP/EUR slumped around two cents on Tuesday alone and has fallen even further since.
Overnight, GBP/EUR touched on a low of 1.1692 – the pair’s worst level since the beginning of the month – and currently trends close to the level of 1.1709.
In one of the Pound’s worst weekly performances in years, the British currency has given up most of its December gains. Meanwhile, the Euro (EUR) outlook is limited by mixed Eurozone data.
Pound (GBP) Exchange Rates Lacks Drive as BoE Governor Carney’s Successor Announced
After days of bearish and limp movement, the Pound saw modest attempts to recover from its worst weekly levels today.
However, the currency’s drive was limited due to a lack of support and persisting fears that a no-deal Brexit is still highly possible even under a Conservative majority government.
Ray Attrill, Head of FX Strategy at National Australia Bank, said:
‘The market was always a little bit naive in a way to think that a Tory election win was going to remove the fog of Brexit,
There were obviously some longs in weak hands that got forced out.’
As a result, today’s Pound gains have been more of a rebound from losses.
Sterling’s movement was little-impacted by yesterday’s Bank of England (BoE) news.
The announcement of the next Bank of England (BoE) Governor also had limited impact. Andrew Bailey will succeed Mark Carney on the 15th of March, and his term will last until 2028.
Euro (EUR) Exchange Rates Struggle to Hold Best Levels amid Mixed Eurozone Data
The Euro has been surprisingly resilient for most of this week, but this has been largely due to broad weakness in the currency’s major rivals.
A plummeting Pound, as well as the US Dollar (USD) seeing pressure earlier in the week, made it easier for the Euro to sustain gains.
However, while some Eurozone data has been supportive this week, other Eurozone data has been more disappointing and has limited the Euro’s appeal.
German business confidence data on Wednesday beat forecasts, but this morning’s German consumer confidence data from GfK unexpectedly dropped to 9.6 rather than rising to 9.8 as expected.
Germany’s finance industry also said today that it expects exports to remain subdued over the coming months, which has only done more to keep investors cautious about the Eurozone outlook.
Pound to Euro (GBP/EUR) Exchange Rate Awaits Brexit Developments
Investors are firming again on the Pound after a week of considerable losses, but the Pound could still see further volatility before markets close for the week depending on upcoming Brexit developments.
It is widely expected that UK Parliament will once again vote on UK Prime Minister Boris Johnson’s Brexit withdrawal agreement plan today. Due to the strong Conservative majority, the bill is likely to pass.
Pound investors will be closely watching for potential amendments or details. If amendments are perceived as making a no-deal Brexit more likely, the Pound could be in for even deeper losses today.
On the other hand, if any chances of the Brexit transition period being delayed remain, the Pound could see some relief.
The Euro could react to upcoming Eurozone confidence stats. Looking ahead though, German retail sales due for publication next week could also influence the Pound to Euro (GBP/EUR) exchange rate outlook.