Pound Sterling Euro Exchange Rate News: GBP/EUR Stalls on UK Construction Sector Slowdown

GBP/EUR Exchange Rate Muted on Weak UK Construction PMI

UPDATE: The Pound Euro (GBP/EUR) exchange rate is trading in a narrow range this morning as growth in the UK’s construction sector cooled faster than expected last month.

The latest survey revealed construction activity in September fell to its slowest pace since the adverse weather saw growth contract in March, with firms blaming ongoing Brexit uncertainty for lacklustre demand from clients.

Meanwhile the Euro is also facing pressure this morning as markets express concerns that Italy could be hit by punitive measures from the EU over its controversial budget.

 

GBP/EUR Exchange Rate Surges as UK Ready to Compromise on the Irish Border

UPDATE: The Pound Euro (GBP/EUR) exchange rate is surging higher today amid reports Theresa May is preparing to offer the EU a new proposal for the Irish border.

According to a senior government official the new proposals are a ‘compromise’ from the Prime Minister as will she her drop her opposition to new checks on goods moving between the Northern Ireland and the rest of the UK.

This Irish border is currently the largest hurdle in the UK and EU finalising a Brexit agreement, so the news comes as a major relief to GBP investors.

The Pound Euro (GBP/EUR) exchange rate climbed around a cent during last week’s trading session as a controversial budget from Italy’s new coalition government knocked confidence in the single currency.

The government’s decision to target a budget deficit of 2.4% unnerved investors, as not only does it flout the EU’s 2% limit but it also raises concerns over Italy’s sizable debt pile, something which could trigger a downgrade from ratings agencies.

These concerns also undermined any chances for the Euro to strengthen on the back of some hawkish remarks from European Central Bank (ECB) President Mario Draghi regarding the Eurozone’s ‘vigorous pick-up in underlying inflation’.

Meanwhile Sterling sentiment was buoyed at the start of last week’s session by some optimism from the UK’s Brexit minister Dominic Raab on Monday as well as remarks by German Chancellor Angela Merkel on Tuesday.

However the Pound fell back from its best levels on Friday as the UK’s latest GDP figures saw Britain’s first quarter growth revised down to 0.1%.

Pound Euro (GBP/EUR) Exchange Rate Lifted by Surprise Rise in UK Manufacturing PMI Figures

The Pound Euro (GBP/EUR) exchange rate is pushing higher at the start of this week’s session, thanks to an unexpected rise in UK factory activity.

According to data published by IHS Markit, the UK’s manufacturing PMI rose from an upwardly revised 53 in August to 53.8 in September, beating forecasts it would slide to 52.5.

The survey revealed activity in UK factories was buoyed by strong domestic demand for UK goods as well as increased orders from overseas, although many firms continued to express concerns that Brexit uncertainty is impacting their outlook.

Meanwhile the Euro is struggling to advance this morning despite the Eurozone’s latest labour figures revealing unemployment in the bloc had struck an almost decade-low in August.

This appears to be driven mostly by lingering concerns over Italy and how its new budget may impact the country’s debt sustainability.

GBP/EUR Exchange Rate Forecast: Sterling to Weaken as the UK’s Private Sector Slows?

Looking forward the Pound Euro (GBP/EUR) exchange rate is likely to face some pressure as the week goes on when the UK publishes the remainder of its PMI figures.

Economists predict both the construction and service sectors will have slowed in September, likely undermining growth in the manufacturing sector and resulting in a fairly weak end to the third quarter.

Further downside risks to Sterling may also come in the form of further political uncertainty, with the Conservative Party conference likely to highlight the growing divisions within Theresa May’s party over the direction of Brexit.

Meanwhile the release of the Eurozone’s latest retail sales figures may help to buoy the Euro later this week, with analysts forecasting August’s reading will reveal sales growth rebounded from -0.2% to 0.2%.

 

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail


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