GBP/EUR Exchange Rate Buoyed by Gloomy Eurozone Data
The Pound Euro (GBP/EUR) exchange rate is edging higher this morning as markets response to some gloomy Eurozone industrial data.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1892, up roughly 0.2% from today’s opening rate.
Euro (EUR) Undermined by Abysmal Industrial Data
The Euro (EUR) finds itself on the defensive this morning, in the wake of data showing that the Eurozone’s industrial sector ended 2019 on a whimper.
According to data published by Eurostat, industrial production in the Eurozone slumped by 2.1% on a monthly basis in December, prompting an annual contraction of 4.1%, well below expectations of a decline of 2.3%.
The poor reading is not entirely unexpected given the gloomy figures previously released by Germany, France and Italy, but the sharp drop in annual production certainly paints a bleak picture of the Eurozone last year.
The dire figures will add further fuel to speculation that the European Central Bank (ECB) could ease its monetary policy this year.
Pound (GBP) Remains Sensitive to Brexit Developments
Meanwhile, in the absence of any notable UK economic data, Brexit looks set to return as the main catalyst of movement in the Pound (GBP) in the near-term.
This is likely to see Sterling slip as the UK and EU clash over the terms of their future trade relationship.
As part of its opening demand the UK government has called for the EU to agree to a ‘permanent equivalence’ regime for financial services, allowing the City of London to maintain its freedom to operate in EU markets.
The EU’s chief Brexit negotiator Michel Barnier, was quick to rebuff this however, telling the European Parliament on Tuesday:
‘I would like to take this opportunity to make it clear to certain people in the United Kingdom … that they should not kid themselves about this.
‘There will not be general, open-ended, ongoing equivalence in financial services.’
At the same time the UK is resisting the EU’s demands to maintain alignment with EU regulations in order to ensure a ‘level playing field’, stoking concerns of a hard Brexit at the end of 2020.