GBP/EUR Exchange Rate Flat amidst Ongoing Brexit Angst
The Pound Sterling to Euro (GBP/EUR) exchange rate is rising this morning despite Brexit remaining in focus.
At the time of writing the GBP/EUR exchange rate is up about 0.3% against this morning’s opening rate as the pairing recovers after initially sliding during the Asian session.
Pound Sterling (GBP) Muted as Third Day of Brexit Debates Gets Underway
The Pound (GBP) is struck in a relatively narrow range against the Euro (EUR) this morning as focus on Brexit continues to limit potential upsides to the UK currency.
The parliamentary debate on Theresa May’s Brexit deal will continue for a third day, possibly resulting in a weakening of Sterling sentiment if opposition to the PM’s deal continues to swell.
This follows reports that May has rejected cabinet pleas to postpone the vote to give her more time to win over backbenchers, with some cabinet members fearing a defeat next Tuesday may be enough to topple the government.
However despite this the Pound is holding its ground this morning, suggesting there is still some confidence in May’ plan.
Euro (EUR) Exchange Rates Steady Following Surprise Growth in German Factory Orders
At the same time the Euro (EUR) is holding steady this morning in the wake of some stronger-than-expected German industrial data.
According to data published by Germany’s federal statistics agency, Destatis, domestic factory growth accelerated 0.3% in October, against expectations of a 0.4% contraction.
— Trading Economics (@tEconomics) December 6, 2018
This was the third consecutive month of growth and appeared to be mostly driven by increased demand from within the Eurozone, which helped to offset a decline in domestic orders.
The recent run of growth was cheered by EUR investors amidst hopes an ongoing trend of robust factory activity could help the Eurozone’s largest economy recover after a shock contraction in growth in the third quarter.
GBP/EUR Exchange Rate Forecast: Sterling to Suffer Sharp Drop if Brexit Deal is Rejected?
Looking ahead, movement in the Pound Euro (GBP/EUR) exchange rate is expected to remain dominated by UK politics and Brexit sentiment ahead of the parliamentary vote on May’s Brexit deal next Tuesday.
The fate of Sterling after the vote is the most pressing issue for investors however, with a recent Reuters poll of economists suggesting a rejection of the deal could prompt GBP exchanges to slump as much as 2.75% for fear it will increase the risk of a no-deal Brexit.
Conversely a vote in favour of the deal could lead to an even more dramatic swing in the Pound, with the poll suggesting GBP could soar 3.5% as it provides greater clarity to investors.
In the meantime the release of the Eurozone’s final GDP reading for the third quarter may drag on the euro on Friday, with the figures expected to confirm growth in the bloc slowed to a four-year low in the three months to September.