GBP/EUR Losses Trimmed by Weaker-Than-Expected Eurozone GDP Growth

GBP/EUR Exchange Rate Narrows Losses Following Disappointing Eurozone GDP Figures

UPDATE: While persistent Brexit jitters and some weak domestic retail figures have prompted broad weakness in the Pound (GBP) this morning, the currency has been able to trim its losses against the Euro (EUR) following the release of the Eurozone’s latest GDP figures.

Data published by Eurostat this morning revealed that the Eurozone economy expanded just 0.2% in the third quarter, missing expectations it would hold at 0.4%, likely as a result of the Italian economy stagnating over the summer.

However with this afternoon bringing a possible upswing in German inflation it looks likely that Sterling will still ultimately be forced to cede ground by the end of the session.

GBP/EUR Exchange Rate Edges Higher as Markets React to Merkel’s Plan to Step Down

UPDATE: The Pound Euro (GBP/EUR) exchange rate is making moves higher today as Angela Merkel’s announcement that she will step down as German Chancellor spooked markets.

Speaking in a news conference in Berlin Merkel told reporters that she took ‘full responsibility’ for her party’s election losses in Hesse over the weekend and announced she would not be seeking any political post after her term ends.

Merkel has held the position of Chancellor since 2005, so the news understandably rattled some feathers in Europe this morning about the future of Europe’s largest economy.

However while the news has knocked confidence in the Euro it has only led to modest gains in GBP/EUR as trade in the Pound remains thin ahead of the UK’s Autumn Budget.

Pound Euro (GBP/EUR) Exchange Rate Rises as Angela Merkel Steps Down as CDU Leader in Germany

The Pound Euro (GBP/EUR) exchange rate is trading in a narrow range at the start of this week’s session as an embarrassing setback for Angela Merkel’s coalition government in regional elections in Hesse caused the Chancellor to step down as leader of her Christian Democratic Union Party (CDU).

Preliminary results point to Merkel’s CDU having only secured 27% of the vote in the key region of Hesse, the party’s worst showing since 1966 and an 11% fall from the previous election, with many voters turning instead to the Greens and the anti-immigrant AfD.

Even more worrying is that the Social Democrats (SPD), who make up the other half of Merkel’s coalition government pulled just 19% of the vote, something which could prompt party leader, Andrea Nahles to pull out of the coalition and leave Germany staring at a general election.

Although Merkel remains the German leader, her stepping down as head of the CDU has rattled Euro traders and adds another dose of uncertainty for the EU.

GBP/EUR Exchange Rate Suffers as Brexit, UK Politics in Focus

The Pound Euro (GBP/EUR) exchange rate came under pressure again last week, with Sterling sentiment dented by renewed political uncertainty in the UK.

These came as a result of reports that Theresa May could face a vote of no-confidence as well as suggestions the Democratic Unionist Party (DUP) would back an amendment tabled by rebel Conservatives to essentially make a backstop agreement regarding the Irish border illegal.

The Pound was offered some relief following reports the EU would offer May the option of a UK-wide customs union, these gains proved fleeting as questions arose over the PM’s leadership and whether she would be able to pass such a plan through Parliament.

Things began to look up however as the PM staved off a potential leadership challenge, ‘winning over’ her critics at a Tory committee in the middle of the week.

Unfortunately it proved too little too late for GBP/EUR as markets turned their focus towards the European Central Bank (ECB) following its latest policy meeting.

While the ECB made no changes to monetary policy last week, the confident tone struck by ECB President Mario Draghi in the following press conference proved enough to inspire the Euro and propel the GBP/EUR exchange rate to a five-week low lasting until the end of the week.

GBP/EUR Exchange Rate Forecast: Can an Upbeat BoE Help to Revive Sterling this Week?

Looking past the UK’s Autumn Budget, movement in the Pound Euro (GBP/EUR) exchange rate this week is likely to be dominated by the Bank of England’s (BoE) rate decision on Thursday.

While no policy changes are expected from the Bank this week, GBP investors will be eager to learn more about the BoE’s take on the current state of Brexit negotiations, in addition to whether August’s surprise jump in wage growth will have impacted the Bank’s policy outlook.

In the meantime GBP investors will be focused on the release of Chancellor Philip Hammond’s Autumn Budget on Monday afternoon and how it may impact UK economic growth over the next year.

Meanwhile movement in the Euro will likely be dependent on the publication of the Eurozone’s latest GDP figures on Tuesday, with the release potentially dragging on the Euro if growth in the bloc is shown to have slowed in the third quarter.

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