Weaker German Confidence Boosts Pound Sterling Euro (GBP/EUR) Exchange Rate
UPDATE: As the German GfK consumer confidence index showed a modest but unexpected dip on the month this encouraged the Pound Sterling to Euro (GBP/EUR) exchange rate to push higher.
With sentiment in the Eurozone’s powerhouse economy showing signs of faltering the mood towards the Euro (EUR) naturally dimmed on Wednesday morning.
Mounting market jitters over the Italian budget also helped to boost the GBP/EUR exchange rate, with the threat of a fresh Eurozone crisis casting a shadow over the single currency.
GBP/EUR Exchange Rate Pressured by Brexit Fears despite Carney Rumours
UPDATE: Although reports suggested that Bank of England (BoE) Governor Mark Carney has been asked to extend his tenure through to 2020 this was not enough to limit the downside of GBP exchange rates.
As long as the government appears set to continue moving in the direction of a harder form of Brexit the mood towards Pound Sterling is likely to remain bearish.
Rising Odds of No Deal Brexit Keep Pound Sterling Euro (GBP/EUR) Exchange Rate Under Pressure
As Downing Street refused to confirm whether MPs will have access to a full impact analysis of a no-deal Brexit before their final vote on the matter the Pound Sterling to Euro (GBP/EUR) exchange rate remains under pressure.
This news did little to ease market jitters over Brexit, with the threat of the UK crashing out of the EU without a deal continuing to hang over Pound Sterling (GBP).
With the odds of a no-deal Brexit still looking rather higher than investors would like, the GBP/EUR exchange rate remains under pressure on Tuesday afternoon.
Brexit Anxiety Drags Pound Sterling to Euro (GBP/EUR) Exchange Rate Lower
The Pound Sterling to Euro (GBP/EUR) exchange rate has remained under pressure thanks to persistent market anxiety over the prospect of a ‘no-deal’ Brexit.
Comments from Prime Minister Theresa May gave investors a fresh incentive to sell out of Pound Sterling (GBP), stoking fears that the government is taking a more laid back approach to the possibility.
GBP exchange rates struggled to find support in spite of May seeking to downplay the impact of recent Treasury warnings over the damage that the UK leaving the EU without a deal could cause the domestic economy.
With the original October deadline for the conclusion of withdrawal treaty talks now pushed back to November markets are still sceptical over the likelihood of negotiations ending with a successful deal.
GBP/EUR Exchange Rate under Pressure as German Sentiment Improves
Unexpectedly strong German IFO business sentiment surveys have further weighed on the Pound Sterling to Euro (GBP/EUR) exchange rate at the start of the week.
Demand for the Euro (EUR) picked up on the back of a stronger-than-forecast uptick in the headline business climate index, suggesting that optimism within the Eurozone’s powerhouse economy is building.
Even so, the single currency struggled to significantly capitalise on the positive data thanks to lingering worries over the future of the Italian economy.
The budget conflict between the Italian government and EU spending regulations continued to escalate, putting the Euro under some pressure as investors remain wary of a greater falling out with the EU.
This helped to limit the negative impact on the GBP/EUR exchange rate in the short term, as political jitters continued to weigh on both sides of the pairing.
Weaker UK Consumer Credit to Weigh on Pound Sterling Euro (GBP/EUR) Exchange Rate
Further downside pressure could be in store for the Pound Sterling to Euro (GBP/EUR) exchange rate if Thursday’s raft of lending data proves disappointing.
Forecasts point towards a modest decline in mortgage approvals for July, as well as a dip in net consumer credit, which suggests that domestic sentiment is souring.
Confirmation that household borrowing is easing could send Pound Sterling trending lower across the board, further undermining confidence in the outlook of the UK economy.
As high levels of consumer spending have been a significant factor in driving economic growth in the wake of the EU referendum, any signs of weakness are likely to dent the GBP/EUR exchange rate.
Jitters Forecast for GBP/EUR Exchange Rate on Eurozone Inflation Data
Focus is also set to fall on the latest German and Eurozone consumer price index data this week, which could help to shore up the Pound Sterling to Euro (GBP/EUR) exchange rate.
Any softening of the inflation rate could give the European Central Bank (ECB) an incentive to leave interest rates on hold for longer, to the detriment of the Euro.
If price pressures fail to show signs of building or fall back on the month this may give the GBP/EUR exchange rate a boost ahead of the weekend.
On the other hand, another increase in inflationary pressure would bolster the appeal of the single currency, putting further pressure on the ECB to deliver a rate hike sooner rather than later.
Either way, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to see some volatility in response to this data.