Today: Pound Euro (GBP/EUR) Exchange Rate Rangebound as Eurozone Industrial Production Tumbles
The Pound Euro (GBP/EUR) exchange rate is trading in a narrow range this morning following the publication of the Eurozone’s latest industrial production figures, and is currently trading at an inter-bank rate of €1.1209.
According to data released by European statistics agency, Eurostat, production plummeted from a revised 0.1% to -1.7% in November, its worst slump since February 2016.
The report shows that the downturn was broad based, impacting most of the Eurozone’s largest economies and hitting most areas of production.
Eurostat’s report read:
‘In the euro area in November 2018, compared with October 2018, the production of capital goods fell by 2.3%, durable consumer goods by 1.7%, intermediate goods by 1.2%, non-durable consumer goods by 1.0% and energy by 0.6%.’
This coincided with a lull in Pound (GBP) movement at the start of the week, with most investors remaining wary of the UK currency as they await the upcoming Brexit vote.
Last Week: GBP/EUR Exchange Rate Jumps on Brexit Delay Speculation
The Pound Euro (GBP/EUR) exchange rate spent much of last week’s session trending lower as the return of Parliament after the Christmas recess saw Brexit anxiety begin to drag on Sterling (GBP) once more with Theresa May confirming the date of a vote on her EU withdrawal deal.
However the Pound skyrocketed at the very end of the week on reports that an expected rejection of May’s deal could delay or even cancel Brexit, a potential outcome which excited GBP investors.
Meanwhile the Euro (EUR) found its gains trimmed at the start of last week as some weak German industrial data reignited fears that Europe’s largest economy may contract again in the fourth quarter, entering a technical recession.
A dip in the US Dollar (USD) and some stronger-than-expected employment data from the Eurozone helped to propel the single currency higher in the mid-week, but the Euro was unable to sustain its gains on Friday in the face of a resurgent Pound.
GBP/EUR Exchange Rate Forecast: Brexit Vote Set to Dominate Sterling
Looking to the week ahead, barring another delay, the House of Commons vote on Theresa May’s Brexit deal looks to be the main catalyst for movement in the Pound Euro (GBP/EUR) exchange rate this week.
The vote is widely expected to result in MPs rejecting the deal, an outcome that is likely to cause major volatility in Sterling (GBP) as it greatly increases the level of uncertainty surrounding the whole process.
Outside of the vote, the UK’s latest CPI figures may also influence the GBP/EUR exchange rate on Wednesday, with a robust inflation reading potentially offering some support to the Pound.
Meanwhile the publication of Germany’s 2018 budget and GDP report is likely to be closely watched by EUR investors on Tuesday, with the Euro likely to drop if it is revealed that Germany entered a technical recession in the fourth quarter, as many analysts suspect.