GBP/EUR Exchange Rate Steady as CDU to Vote for Merkel’s Successor
The Pound Sterling to Euro (GBP/EUR) exchange rate is trading in a narrow range this morning as markets brace for the Germany’s Christian Democrat (CDU) leadership vote later this afternoon.
At the time of writing the GBP/EUR exchange rate is virtually unchanged from this morning’s opening rate after a brief dip at the start of the European session.
As Merkel’s Era comes to a Close How Will her Successor Impact Euro (EUR) Exchange Rates?
As Angela Merkel steps down as leader of Germany’s ruling Christian Democrats (CDU) today, the race to succeed her comes to a climax, with CDU party members set to vote on who may become her eventual replacement as Chancellor.
Given Germany’s dominant position in the Eurozone and Merkel’s role in shaping EU policy in the years following the financial crisis, EUR investors are understandably nervous over what direction her successor may take.
Currently the two front runners to succeed Merkel as leader of the CDU are Annegret Kramp-Karrenbauer, often referred to as the choice for those seeking ‘more Merkel’ and Friedrich Merz, who is seen as a pulling the CDU towards the right.
Furthermore once a replacement is chosen, Merkel’s remaining time as Chancellor may be in the spotlight, with likely friction between her and the new CDU leader potentially leading her to step down before the end of her term, an outcome that could have major repercussions for the Euro.
Pound Sterling (GBP) Flat as UK House Prices Slump
The Pound (GBP) meanwhile is struggling to find any momentum this morning following the release of the UK’s latest house price index.
According to data published by Halifax, average house prices contracted 1.4% last month, down from a 0.7% expansion in October and resulting in year-on-year growth slowing to just 0.3%, a six year low.
#Halifax report #UK #house #prices slumped 1.4% month-on-month in November; year-on-year increase moderated to just 0.3% in 3 months to November from 1.5% in 3 months to October, taking it down to lowest level since 3 months to December 2012
— Howard Archer (@HowardArcherUK) December 7, 2018
Analysts were quick to blame the slowdown on Brexit uncertainty, with buyers reluctant to make any major investments given the current climate.
Jonathan Samuels, CEO of the property lender, Octane Capital suggests:
‘The lowest rate of growth for six years is a reflection of how Brexit uncertainty has hit the property market for six.
‘Mortgages are still cheap and the employment market strong, but the great unknown of Brexit is causing prospective buyers and sellers alike to err on the side of caution.’
GBP/EUR Exchange Rate Forecast: Brexit Vote to Dominate Sterling Next Week?
Looking ahead to next week’s session, the parliamentary vote on Theresa May’s Brexit deal is likely to lead to significant volatility in the Pound Euro (GBP/EUR) exchange rate.
MPs are widely expected to vote down the deal in a vote on Tuesday, with analysts forecasting the ensuing fallout could send Sterling spiralling lower.
Meanwhile EUR investors are awaiting the European Central Bank’s (ECB) last policy meeting of the year on Thursday, with the bank expected to announce the end to its bond buying programme, while outlining its forward guidance for 2019, potentially weakening the Euro if the recent slowdown in the Eurozone leads to a more dovish outlook from policymakers.