The Pound to Euro (GBP EUR) exchange rate is beating a hasty retreat again this morning in the wake of Priti Patel’s resignation from her position as international development secretary.
The interbank GBP EUR exchange rate is currently sitting at around €1.1278, down 0.33% from its opening levels of €1.1316.
Pound (GBP) Exchange Rates Slump as Patel Resignation Prompts Uncertainty
Pound Sterling (GBP) exchange rates continue tumbling this morning after Prime Minister Theresa May lost a second cabinet minister within the space of week following Patel’s resignation yesterday.
Patel’s resignation comes after it emerged she had held a number of undisclosed meeting with Israeli officials in recent months.
The PM is said to have demanded her resignation in a ‘short but cordial’ six-minute meeting.
While May has not yet announced a successor to Ms Patel this will be the second cabinet reshuffle for the PM in little over a week after Sir Michael Fallon resigned as defence secretary last Wednesday.
The constant shuffling has done little to alleviate concerns that May’s government is becoming increasingly unstable, with signs of infighting and ministers going rogue on policy not exactly inspiring confidence.
The apparent instability at the top of the UK government is also likely to add to the uncertainty of Brexit, with investors fearing it could hamper negotiations ever further.
A European Leader is said to have told The Times; ‘There is the great difficulty of the leadership in Great Britain, which is more and more fragile, Britain is very weak and the weakness of Theresa May makes negotiations very difficult.’
Will Euro (EUR) Exchange Rates Rise as Eurozone Growth Picks Up
The Euro was lifted further this morning as investors welcomed suggestions that the Eurozone economy will have expanded faster than expected this year.
According to the latest forecast from the European Commission, total growth in the bloc is now expected to reach 2.2% this year, a notable increase from the 1.7% forecast earlier in the year.
The revised forecasts come in light of the Eurozone’s stellar performance this year as the bloc appears to have finally emerged from the debt crisis that has hindered expansion.
The Commission’s report read; ‘The European economy has performed significantly better than expected this year, propelled by resilient private consumption, stronger growth around the world, and falling unemployment.’
GBP EUR Exchange Rate Forecast: Government Weakness to Slow Brexit Talks?
Looking ahead, the GBP EUR exchange rate may see some movement later today with the start of the sixth round of Brexit talks after both sides expressed a desire to see negotiations speed up.
However, with May’s government in apparent chaos investors fear that these desires may prove to be nothing more than wishful thinking, with any signal that talks are not accelerating likely to weaken the Pound.
Meanwhile an expected rise in French Industrial production may help to strengthen the Euro tomorrow, with economists forecasting that factory output will have rebounded in September after declining in August.