Rising UK Wages Boost GBP/EUR Exchange Rate to Seven-Month High
UPDATE: As the latest UK wage data bettered forecast this encouraged Pound Sterling (GBP) to strengthen, even as the corresponding unemployment rate proved disappointing.
With wage growth continuing to accelerate in spite of Brexit uncertainty the Pound Sterling to Euro (GBP/EUR) exchange rate surged higher, climbing 0.76% on the day’s opening level.
While the German ZEW economic sentiment survey showed a modest improvement on the month this was not enough to shore up the Euro (EUR) today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Volatile on Reports that Brexit Treaty is ‘Almost Ready’
UPDATE: As markets remain sceptical that the UK and EU will be ready to agree a deal in the coming days, however, the GBP/EUR exchange rate struggled to hold onto an uptrend for long.
Even if the two sides can reach an agreement it remains to be seen whether Theresa May can get a deal through Parliament, keeping the risk of a no-deal Brexit alive.
Barnier Comments Encourage GBP/EUR Exchange Rate Recovery
UPDATE: Brexit speculation continued to drive volatility for Pound Sterling (GBP) into the afternoon thanks to comments from EU officials.
Reported words from chief EU negotiator Michel Barnier encouraged investors to buy back into the Pound, with Barnier appearing to express optimism in the state of Brexit negotiations.
With the text of the Brexit treaty supposedly almost ready the Pound Sterling to Euro (GBP/EUR) exchange rate was able to claw back some of its lost ground.
Pound Sterling Euro (GBP/EUR) Exchange Rate Softens as Brexit Worries Mount
The latest bout of market jitters over Brexit saw Pound Sterling (GBP) come under renewed pressure this morning as the odds of an imminent agreement appeared to diminish.
As Theresa May reportedly cancelled a planned cabinet meeting this suggested that ministers remain divided over the proposed plans, pushing back the likely date of any agreement between the UK and EU.
Unless May can rally support for the Brexit deal and settle the issue of the Irish border the prospect of a hard exit is likely to continue hanging over the domestic economy.
The closer the March 2019 deadline draws the more GBP exchange rates are likely to come under pressure in the absence of the two sides finalising a deal.
Italian Budget Dispute Continues to Dampen Appeal of Euro (EUR)
Political concerns have also continued to weigh on the Euro (EUR) this week thanks to the ongoing budget dispute between Italian and EU officials.
With the Italian government looking set to defy pressure to submit a revised 2019 budget to the European Commission on Tuesday EUR exchange rates could come under renewed pressure.
As the Italian economy has continued to demonstrate signs of weakening investors remain sceptical over the likely impact of the Italian government’s plans.
Increasing signs of tension within the Eurozone look set to limit the downside potential of the Pound Sterling to Euro (GBP/EUR) exchange rate.
If the Italian government sticks to its initial budget deficit target this could see the single currency extend its recent losses further this week.
GBP/EUR Exchange Rate to Recover Ground on Solid UK Wage Growth
A rallying point could be in store for the Pound, meanwhile, as forecasts point towards a solid showing from September’s weekly earnings data.
Investors expect to see average weekly earnings excluding bonuses hold steady at 3.1% in the three months to September, remaining firmly ahead of inflation data.
Continued wage growth should lend support to the wider economy, encouraging consumers to spend more in the final months of the year.
However, an uptick in Wednesday’s consumer price index data may prompt another slump for the GBP/EUR exchange rate.
While a higher inflation rate would put the Bank of England (BoE) under greater pressure to consider raising interest rates the implications for the domestic economy would not be so positive.
Weakening German Growth Forecast to Weigh on Euro (EUR) Exchange Rates
Confidence in the Euro could deteriorate further if the third quarter German gross domestic product points towards a loss of momentum within the Eurozone’s powerhouse economy.
Forecasts suggest a slowdown from 2.0% to 1.3% on the year, confirming the negative impact that mounting global trade tensions had have on the German economy.
A contraction in growth on the quarter may drive EUR exchange rates into a sharp slump, with signs already pointing towards a weak economic performance in the fourth quarter.
With growth expected to ease across the Eurozone the Pound Sterling to Euro (GBP/EUR) exchange rate could return to a stronger footing in the days ahead.