Pound Sterling Euro (GBP/EUR) Exchange Rate Rallies as Italy Economy Contracts

GBP/EUR Exchange Rate Fluctuates as Eurozone Data Worse-than-Expected

UPDATE: The Pound Euro (GBP/EUR) exchange rate rallied in the latter half of this morning, as data from the Eurozone disappointed, jumping to €1.1244 before slumping to inter-bank rates of €1.1206.

Despite the prediction that the consumer price index was going to remain steady for November, the figure dropped to 1%, and the unemployment rate for the Eurozone remained steady for October at 8.1% despite the prediction of a drop.

The contraction in Italy’s gross domestic product (GDP) also did little to help the Euro rally against the Pound, as it saw a worse-than-expected drop to -0.1% in Q3.

GBP/EUR Exchange Rate Slips Further Despite Weaker-than-Expected German Data

UPDATE: Weaker-than-expected data from Germany has done little to bolster Sterling as it is still suffering from the worst-case-scenario predictions from the Bank of England’s (BoE) Mark Carney.

The pairing is currently sitting at an inter-bank rate of €1.1229.

Germany’s consumer price index for November was 2.3% compared to last year where the figure stood at 2.5%, with a prediction of it only falling to 2.4% on an annualised basis.

Germany’s harmonised index of consumer prices came in lower than expected at 2.2% from 2.4% last November. Despite these figures, the Euro still has the upper hand over the Pound.

GBP/EUR Slides as Better-than-Expected Eurozone Data bolsters Euro

UPDATE: Positive data from the Eurozone this morning has helped to propel the Euro further against the Pound, as better-than-expected data was released.

The EUR economic sentiment indicator for November fell by 0.2, although the data is still positive in that it was predicted to fall further, to 109.0 from 109.7.

Eurozone industrial confidence is up from 3.0 to 3.4 despite a predicted fall to 2.5, services sentiment remains steady in November at 13.3, despite a predicted fall to 13.1, and consumer confidence has not slipped further, remaining steady at -3.9.

Pound Sterling Euro (GBP/EUR) Exchange Rate Slumps on the Back of Bleak Post-Brexit UK Warnings

The Pound Sterling Euro (GBP/EUR) exchange rate has slumped this morning following the bleak post-Brexit economic situation outlined by the Bank of England yesterday.

Adding to the Pound’s weakness against the Euro, some positive data this morning out of Germany showed that the unemployment rate has shown a better-than-expected improvement, falling by 16,000 despite the forecast being only for 10,000.

The unemployment rate in Germany is at record lows, indicating a strengthening labour market – it is the lowest since the German reunification in 1990.

French Q3 gross domestic product (GDP) figures have remained steady quarter-on-quarter, but year-year-year they have suffered a worse-than-expected drop from 1.5% to 1.4%, despite the prediction that it would remain at the same rate as last quarter.

GBP/EUR Exchange Rate Battered by Bank of England Predictions

Yesterday, the Bank of England (BoE) warned that a no-deal Brexit would send Sterling plummeting, with the UK economy shrinking up to 8% in the immediate aftermath of Brexit if there is not a trade deal or transition period.

The BoE also warned that the UK currency could fall by up to a quarter, although it assured this was not what it expected to happen, with the data relating to a worst-case-scenario of a ‘disorderly Brexit’.

However, the bank moved to reassure investors that the UK financial system was robust and could withstand a disorderly Brexit, should this be the case, stating:

‘The UK banking system is strong enough to continue to serve UK households and businesses even in the event of a disorderly Brexit.’

GBP/EUR Exchange Rate Rallies Yesterday as German Consumer Confidence Slides

Yesterday saw fall in consumer confidence in Germany, with the Gfk consumer confidence survey reporting a greater-than-anticipated drop from 10.6 to 10.4, despite the predicted 10.5.

This gave the Pound the energy to rally against the Euro, as it reached a weekly high, trading at rates of around €1.1345.

Fiona Cincotta, senior market analyst at City Index stated:

‘Weaker-than-forecast Ifo business sentiment data, in addition to Draghi’s acknowledgement of a recent softening in Eurozone data unnerved Euro traders, sending the Euro lower.’

GBP/EUR Exchange Rate to Slumps Further in Wake of Positive Eurozone Data?

With Brexit remaining the main catalyst for movement within the Pound, it seems likely that the more signs of resistance against Theresa May’s Withdrawal Act, the more likely the Pound is going to drop against the Euro.

Friday will see the release of UK consumer confidence figures for November, and if the forecast of a fall is correct, it could allow the Euro to make further gains against the Pound.

The Eurozone unemployment rate is also set to be released tomorrow morning, and if it is set to decrease from 8.1% to 8%, the Euro could be further bolstered.

First though, the Eurozone consumer price index estimate is due to be released, and if this is set to follow the predictions and decrease from 2.2% to 2% the Pound may be able to claw back some of its losses made over the course of today’s session.

Hannah Wilson

Contact Hannah Wilson