GBP/EUR Exchange Rate Dips as Boris Johnson Draws Up New Brexit Legislation
The Pound to Euro (GBP/EUR) exchange rate fell by -0.3% today, with the pairing currently fluctuating around €1.116.
Sterling suffered after British Prime Minister Boris Johnson said that he would draw up legislation to override the Brexit withdrawal agreement on Northern Ireland.
British Foreign Secretary Dominic Raab said on Sunday that UK-EU negotiations were fast approaching a ‘moment of reckoning’ and that a post-Brexit deal was ‘there for the taking’.
Nevertheless, there are growing fears that the deadlock between the UK and the EU could result in a no-deal Brexit on December 31st.
And with Boris Johnson setting a firm deadline for 15th October for a deal to be singed off, GBP investors are becoming increasingly jittery.
Me Johnson said:
‘There is no sense in thinking about timelines that go beyond that point. If we can’t agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on.’
Raoul Ruparel, who was on the former Prime Minister’s Brexit negotiating team, said:
‘It is just [David] Frost and [Michel] Barnier and the same teams in talks; you’ve got two immovable objects sitting down again and you are not going to see great movement coming from that.’
Euro (EUR) Edges Higher Despite Fears of Germany’s Manufacturing Sector Losing Steam
The Euro (EUR) rose against the weaker Pound (GBP) today despite a weaker-than-expected German industrial production figure for July.
The seasonally-adjusted month-on-month figure undershot forecasts and slipped from 9.3% to 1.2%.
EUR investors are becoming increasingly concerned that the Eurozone’s powerhouse economy is losing steam in its manufacturing sector.
As a result, we could see the single currency continue to dip against some of its peers today.
Carsten Brzeski, the chief Eurozone Economist at ING, was more optimistic, however, saying:
‘The German economy remains on track for a strong surge in the third quarter. It is too early to tell how much momentum will be left thereafter.’
In other Eurozone economic news, today will see the release of September’s Sentix Investor Confidence figure for September.
If this confirms forecasts and remains in negative territory at -10.5, then we could see the EUR/GBP exchange rate suffer.
GBP/EUR Forecast: Could Brexit Fears Drag Sterling Deeper?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the Eurozone’s GDP figure for the second quarter. However, if this confirms consensus and falls deeper into recession territory, we could see the EUR/GBP exchange rate drop.
Tomorrow will also see the release of German’s Trade Balance report for July. Any improvement in the Eurozone’s largest economy would prove EUR-positive.
The GBP/EUR exchange rate could continue to sink this week if the outlook for Brexit talks between the UK and EU remain bleak. If Downing Street continues to push for a compromise, then we could see Sterling struggle on fears of a possible no-deal Brexit later this year.