GBP/EUR Exchange Rate Consolidates Gains as No-Deal Brexit Fears Fade
The Pound Euro (GBP/EUR) exchange rate remains on solid foot this morning, as renewed hopes the UK will avoid a no-deal Brexit maintains the upside in Sterling.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1119, rallying to its highest levels since July.
Defeat for Boris Johnson Boosts the Pound (GBP)
The Pound (GBP) is currently riding high against the Euro (EUR) and the majority of its other peers as the risks of a no-deal Brexit have seemingly tumbled over the past couple of days.
This comes after Boris Johnson’s government suffered two key defeats in parliament.
The first defeat came as MPs backed a bill compelling the Prime Minister to request another extension to the Brexit deadline from the EU.
In response to this setback Johnson had tabled a motion to call for a general election, claiming that ‘the only action is to go back to the people and give them the opportunity to decide what they want’.
However this failed to secure the majority required, further boosting Sterling sentiment as it helped to reduce some of the political uncertainty which has hung over the currency in recent weeks.
Should this uptrend continue then we could see the GBP/EUR exchange rate past the €1.12 barrier in the near-term.
Euro (EUR) Suffers as German Factory Orders Nosedive
The Euro (EUR) finds itself on the back foot again this morning as markets react to another piece of disappointing German industrial data.
According to figures published by German statistics agency, Destatis, factory orders plummeted from 2.7% to -2.7% in July, contracting almost twice as much as economists had forecast.
The data confirms the slump in Germany’s manufacturing sector has persisted into the third quarter, increasing the risk that the country could slip into a recession this year.
Carsten Brzeski, chief economist at ING Germany said:
‘Today’s data is the first hard data for the third quarter and it doesn’t bode well at all. The combination of shrinking order books and high inventories suggests that the industrial slump will not be over any time soon.’
GBP/EUR Forecast: German Industrial Data Remains in Focus
Looking ahead to the end of this week’s session, we may see the uptrend in the Pound to Euro (GBP/EUR) exchange continue with the release of Germany’s industrial production figures.
Barring a major upswing in output in July its likely Friday’s data will cast even more gloom over the German economy, limiting the appeal of the single currency.
UK politics looks certain to remain in focus for GBP investors through the remainder of the week amid speculation on when Labour may give its support for a general election.