GBP/EUR Slides to €1.15 as Brexit Fears Grow

GBP/EUR Exchange Rate Bludgeoned by Brexit Anxiety

UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate has slumped almost a cent today, with the pairing falling to a low of €1.1595 as investors growing increasingly skittish regarding Brexit.

This appeared to be driven by pessimism ahead of last minutes talks between the UK and EU over the weekend as Theresa May desperately attempts to secure legally binding changes to the Irish backstop in order to salvage her withdrawal deal.

With May unlikely to secure these changes it looks highly likely that MP’s will reject her deal in a meaningful vote on Tuesday.

GBP/EUR Exchange Rate Steady Following Disappointing German Data

The Pound Sterling to Euro (GBP/EUR) exchange rate is stuck in a narrow range this morning as some gloomy German industrial data helped to offset ongoing Brexit uncertainty.

At the time of writing the GBP/EUR exchange rate remains close to its opening levels, leaving the pairing just shy of the highs hit on Thursday and trading at an inter-bank rate of €1.1668.

Euro (EUR) Exchange Rates Softened by German Factory Figures

The Euro (EUR) is struggling to find any momentum this morning as the latest German industrial data prompts further concerns over the state of the Eurozone’s largest economy.

According to data published by Destatis, German factory order growth was reported to have tumbled from 0.9% to -2.6% in January, shocking EUR investors who had expected another month of modest growth at the start of 2019.

The figures come hot on the heels of the European Central Bank’s (ECB) latest rate decision on Thursday.

This saw the Euro nosedive yesterday as the bank slashed its economic forecasts for the year as well as announcing a third round of stimulus funding for European banks in an effort to stave off a prolonged slowdown.

However the ECB’s dovishness appears to have been at least partly vindicated this morning given the poor state of the manufacturing sector of Europe’s largest economy.

Pound Sterling (GBP) Stalls as May Makes Final Call for EU to Agree to Backstop Changes

At the same time the Pound (GBP) remains muted this morning as Theresa May makes a last ditch attempt to get the EU to agree to legally binding changes to the Irish backstop agreement.

The PM is expected to urge the EU to accept the changes and state that the EU’s choice will ‘have a big impact on the outcome’ of next week’s Brexit vote.

GBP investors aren’t holding out much hope for a positive response from the EU however, with the bloc widely expected to stick to its guns as it calls for the UK to find an acceptable alternative to the backstop.

Should May fail to secure any changes to the backstop agreement, then it appears highly likely that MPs will again reject the deal when it is put before the House of Commons next week.

GBP/EUR Exchange Rate Forecast: Brexit Votes to Dominate Sterling Next Week

Looking ahead to next week’s session, movement in the Pound Euro (GBP/EUR) exchange rate will undoubtedly be dominated by Parliament’s ‘meaningful vote’ on Theresa May’s withdrawal deal and the votes that will follow should it be rejected.

This is likely to result in some considerable volatility in Sterling throughout the week, with the outcome of each likely to have a major impact on the outcome of Brexit.

Meanwhile, EUR investors are likely to remain focused on Germany at the start of next week’s session with the release of the country’s latest industrial production figures.

This may see the Euro stumble on Monday if another contraction in output at the start of 2019 further stokes concerns of a potential recession in Germany this year.

Matthew Andrews

Contact Matthew Andrews