Pound Sterling Euro (GBP/EUR) Exchange Rate Remains Low on Back of Disappointing UK Data Releases

GBP/EUR Exchange Rate Subdued as UK Consumer Credit Grew at Slowest Rate since 2014

Today, the Pound Sterling Euro (GBP/EUR) exchange rate remained subdued, and is currently trading at an inter-bank rate of €1.1454.

Germany’s Harmonised Index of Consumer Prices for January was released Wednesday afternoon which performed as forecast, remaining steady at 1.7% growth, which did little to bolster the Euro.

UK data this morning showed better-than-expected UK mortgage approvals, although the figure still declined compared to the previous month, hitting an eight month low which likely did little for Sterling.

UK consumer credit figures showed that it grew at its slowest pace since 2014, which likely dragged the Pound down further.

Last night saw both the ‘Grieve’ and ‘Cooper’ amendments rejected by Parliament, although the ‘Brady’ amendment was passed which called for ‘alternative arrangements’ to replace the Irish backstop.

The response of Donald Tusk, European Council President, likely weighed on the Pound as he announced the EU would not reopen the deal, and the withdrawal agreement still remains the best option.

GBP/EUR Exchange Rate Buoyed Despite Fears of a No-Deal Brexit

UPDATE: This afternoon, the Pound Euro (GBP/EUR) exchange rate has rallied around 0.2% and is currently trading at an inter-bank rate of €1.1535.

As MPs discuss various Brexit amendments in Parliament, Prime Minister Theresa May has said she had profound doubts about the so-called Cooper and Grieve amendments, as they both miss the most obvious route to avoiding a no-deal Brexit.

On the Cooper amendment, May has said that it will not prevent a no-deal Brexit, it will simply delay the process. She stated:

‘The British people just want to see this done, extending Article 50 does not rule out no-deal.’

Despite this, the Pound still remains buoyed against the Euro.

Pound Euro (GBP/EUR) Exchange Rate Weighed Down as Spanish Unemployment Falls to 10-Year Low and French Consumer Confidence Reveals Surprise Uptick

The Pound Sterling Euro (GBP/EUR) exchange rate remains weighed down this morning, with the pairing currently trading at an inter-bank rate of €1.1507.

This morning, the Q4 2018 figure for Spanish unemployment survey fell from 14.60% to a lower-than-expected 14.45%.

This showed that Spain’s jobless rate had slid to a 10-year low as unemployment has fallen steadily from a high of close to 27% in 2013, which likely helped to keep the Euro buoyed.

Data also showed that French consumer confidence rose in January from a previous slump, although it remained below average at 91, as the country faces the impact of anti-government protests.

Yesterday: Pound (GBP) Slips due to Brexit Backstop Pressures

Monday saw the Pound Euro (GBP/EUR) exchange rate slide as Brexit jitter resurfaced ahead of today’s debate and vote in Parliament.

UK Prime Minister Theresa May has been urged to secure change on the issue of the Irish backstop with the EU, who have not yet indicated they would allow such a time limit.

Last week, European Chief Negotiator, Michel Barnier said a time limit on the backstop would be ‘useless’, stating:

‘Imagine if it were to be limited in time and the problem arose after expiry: it is useless.’

Euro (EUR) Pushes Back Despite Dovish Draghi

Yesterday also saw President of the European Central Bank (ECB) Mario Draghi reiterate his previous warnings that the Eurozone had been performing worse than expected.

Draghi stated:

‘However, over the past few months, incoming information has continued to be weaker than expected on account of softer external demand and some country and sector-specific factors. The persistence of uncertainties in particular relating to geopolitical factors and the threat of protectionism is weighing on economic sentiment.’

Meanwhile, the annual growth rate of the Eurozone M3 measure of money supply boasted its highest reading since last June, which bolstered the Euro (EUR) somewhat.

GBP/EUR Outlook: Will Brexit Optimism Aid Sterling?

It is likely that today, Brexit will be the main catalyst for movement for Pound (GBP) exchange rates, as MPs debate the Prime Minister’s ‘Plan B’ and vote on various amendments.

The Pound Sterling Euro (GBP/EUR) exchange rate may rise later on if the ‘Cooper amendment’ is passed, which would see the likelihood of a no-deal Brexit slip.

Another amendment, proposed by Senior Conservative MP Graham Brady calls for the removal of the Irish backstop and for it to be replaced with ‘alternative arrangements’.

Wednesday could see the Euro (EUR) slide as January’s Eurozone Business Climate figure is expected to fall from 0.82 to 0.73, pointing towards a deterioration of conditions in the bloc.

Sentiment for the Euro could improve on Wednesday afternoon as the German Harmonised Index of Consumer Prices for January is expected to show 1.8% growth compared to the previous 1.7%.

If this happens we could see the Pound Euro (GBP/EUR) exchange rate pressured a little.

Hannah Wilson

Contact Hannah Wilson