GBP/EUR Exchange Rate Bolstered by Impressive UK Wage Figures
UPDATE: The Pound Euro (GBP/EUR) exchange rate has climbed back above €1.14 for the first time this week as some impressive UK labour figures helped Sterling to temporary shake off its Brexit angst.
This comes as a surprise upswing in UK wage growth bolstered market sentiment this morning, with investors welcoming the news that basic pay struck a nine-year high of 3.1% in August.
Meanwhile the Euro was unable to stave off the Pound’s advances this morning, as the single currency was undermined as economic sentiment in the Eurozone was shown to have fallen to its lowest levels since 2012 in October.
GBP/EUR Exchange Rate Fluctuates on Mixed Brexit Outlook
The Pound Euro (GBP/EUR) exchange rate looked destined to continue its recent winning streak last week, as the pairing was lifted by optimism that the UK and EU were closing in on a Brexit agreement.
This saw GBP/EUR break the €1.14 barrier on Tuesday for the first time since June as some analysts began to suggest that a deal could be finalised ahead of October’s EU summit of leaders
However things began to fall apart for Sterling in the second half of last week, with optimism of an imminent Brexit deal beginning to fade as it become increasingly clear that the two sides would be unable to resolve their issues over the Irish border.
Accelerating these losses on Friday were some stronger-than-expected Eurozone industrial figures, which helped to offset concerns over Rome’s decision to push through its controversial budget plans and aided the Euro’s advance against the Pound.
Pound Euro (GBP/EUR) Exchange Rate Dives as Brexit Talks Stall
The Pound (GBP) is on the defensive against the Euro (EUR) and the majority of its other currency peers at the start of this week’s session following the breakdown in Brexit talks over the weekend.
Reports suggest that the unresolved issues over the Irish border and a possible ‘backstop’ for the UK to remain within the EU customs union were the key points of contention in the last round of talks.
While Downing Street remains confident that progress can still be made, the collapse of talks over the weekend means there will be no Brexit deal put forth to EU leaders at this week’s summit, and resulting in attendees to focus on the withdrawal process rather than potentially discussing a future relationship.
To quote that well known #politician & #economist Sir Alex Ferguson, we are into “squeaky bum” time in the #EU – #UK negotiations. #Brexit talks are mired in stalemate. It doesn’t look good for this week’s summit https://t.co/uI4gxD7yUM via @bpolitics
— Howard Archer (@HowardArcherUK) October 14, 2018
This is likely to cast a dark cloud over Sterling throughout the session as markets will again have to digest the idea that the UK is headed towards a no-deal Brexit.
GBP/EUR Exchange Rate Forecast: Robust UK Labour Report to Offer Sterling a Lifeline this Week?
Looking ahead, the Pound Euro (GBP/EUR) exchange rate may find some respite from the growing Brexit uncertainty this week thanks to the release of the UK’s latest economic data.
This starts with the release of the latest labour figures on Tuesday, with economists forecasting that the unemployment rate will have held at its lowest rate since 1975.
However any noticeable rally in Sterling will be reliant upon an upswing in wage growth in August, with another muted reading potentially limiting any upside to the UK currency.
At the same time GBP investors will also be focused on the UK’s latest CPI figures, with a robust inflation reading likely to bolster Bank of England (BoE) rate hike expectations.
Meanwhile in terms of Eurozone data markets will be awaiting tomorrow’s ZEW economic sentiment index, with the Euro likely to come under fire if pessimism amongst the survey respondents rises.