Pound Euro (GBP/EUR) Exchange Rate Rises on News of Possible Brexit Delay

GBP/EUR Exchange Rate Rises as UK GDP Figures Exceed Expectations

The Pound Euro (GBP/EUR) exchange rate is up around 0.3% today and is currently trading in the region of €1.1074 on the inter-bank rate.

Sterling (GBP) steadied against the Euro (EUR) on news that the UK leaving the EU could be delayed.

This came after the Evening Standard newspaper reported meeting with a senior minister who claimed:

‘[I]f there was defeat on Tuesday and it took some time before it got resolved, it’s hard to see how we can get all the legislation through by March 29.’

UK GDP figures for November were released earlier, showing an increase of 0.2% on the month, although this indication of a growing UK economy late last year failed to move the Pound with investors’ focus firmly on Brexit developments.

Pound (GBP) Gains Limited by Lacklustre Manufacturing and Trade Balance Figures

Any potential Pound support, however, was muted by the release of the UK manufacturing production figures for November, which showed a worse-than-expected decrease of -0.3%.

UK goods trade balance figures for November also decreased, further preventing the Pound making any gains on the Euro.

Rob Kent-Smith, Head of National Accounts at the Office for National Statistics, commented:

‘Growth in the UK economy continued to slow in the three months to November 2018 after performing more strongly through the middle of the year. Accountancy and housebuilding again grew but a number of other areas were sluggish.’

The Euro failed to make any movement on the Pound today after the publication of Spain’s industrial output figures showed a decrease. These were then followed by the release of Italy’s seasonally-adjusted outlook figures for November, which decreased beyond expectation by -1.6%.

Pound Euro (GBP/EUR) Exchange Rate Static on Fears of ‘Brexit Paralysis’

Brexit discussions continue to dampen Pound (GBP) sentiment, with the Secretary of State for Foreign Affairs, Jeremy Hunt, commenting today that Prime Minister Theresa May’s Brexit deal could lead the country into a state of ‘Brexit paralysis’. Hunt continued:

‘If we were, as a political class, not to deliver Brexit that would be a fundamental breach of trust between the people and the politicians and I think that would be something that we would regret for many, many generations.’

Pound investors have generally remained cautious ahead of next week’s vote, with Theresa May facing a string of defeats in Parliament after the passing of two amendments which affectively curtail the government’s power, forcing May to come up with a ‘Plan B’ should her deal be voted down on Tuesday next week.

GBP/EUR Outlook: Tuesday’s Brexit Vote in Spotlight

The Pound (GBP) could fall against the Euro (EUR) on Monday if the release of the Eurozone’s seasonally-adjusted industrial production figures for November impress.

Tuesday will see a slew of Eurozone data releases, with the most significant being the French year-on-year consumer price index which is expected to increase, potentially bolstering the Euro.

Sterling investors will be focusing on Parliament’s Brexit vote, with investors holding their breath in fear of a possible ‘no-deal’, which would see the GBP/EUR exchange rate plummet.

John Cameron

John studied economics at Cambridge University and later became an MSTA qualified Technical Analyst. He began working for TorFX almost a decade ago and now holds a Senior Account Manager position. As well as lending his clients support and guidance, John has produced market commentary and detailed exchange rate analysis for a number of online publications.

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