GBP/EUR Exchange Rate Steady as May to Request Brexit Extension
UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate was left rangebound this afternoon, with the pairing stuck around €1.1685 following the news that Theresa May is to write to the EU requesting a delay to Brexit.
As is natural with Brexit, the news was surrounded with uncertainty, with markets unsure over the length of the delay requested.
This resulted in many investors continuing to steer clear of Sterling until more details emerged.
GBP/EUR Exchange Rate Stabilises on Robust UK Labour Report
The Pound Sterling to Euro (GBP/EUR) exchange rate is holding steady this morning as markets were briefly distracted from Brexit by the release of the UK’s latest employment figures.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1688 virtually unchanged from this morning’s opening rate.
Pound Sterling (GBP) Steadies Following Solid UK Employment Data
The Pound (GBP) is trading in a narrow range against the Euro (EUR) and the majority of its other peers this morning as Brexit concerns took a backseat following the release of the UK’s latest labour report.
According to data published by the Office for National Statistics (ONS) UK unemployment unexpectedly fell last month, sliding from 4% to 3.9%, a new 44-year low.
This came as employment continued to surge, with the employment rate rising to a new record high of 76.1% in the three months to January.
— ONS (@ONS) March 19, 2019
On top of this the accompanying earnings figures proved to be surprisingly robust, with headline wage growth being revised up to a new decade high of 3.5% in December and holding at 3.4% at the start of 2019, beating expectations of a slip to 3.2%.
However while the data impressed, many analysts remained wary of the potential impact of Brexit on future hiring.
Tej Parikh, senior economist at the Institute of Directors, said:
‘Businesses have been steadfast in bringing on board new staff and in creating vacancies, despite question marks over the future path of the economy.
‘But with uncertainty around Brexit reaching a crescendo, firms are becoming more and more cagey over their hiring decisions.
‘To build on the current strength in UK employment, employers will want to avoid a disorderly withdrawal from the EU and will above all be urging policymakers to return some much-needed oxygen to the skills and productivity agenda.’
Euro (EUR) Flat as Eurozone Sentiment Improves
At the same time the Euro (EUR) is muted this morning following an improvement in Eurozone sentiment in March.
The ZEW economic sentiment index was reported to have climbed from -16.6 to -2.5 last month, beating expectations that the index would slide to -18.7.
While this shows that economists remain broadly pessimistic in their outlook for the Eurozone, it would suggest that they believe the bloc has reached a turning point and that the Eurozone’s fortunes could be starting to improve.
GBP/EUR Exchange Rate Forecast: UK Inflation or Brexit, Which Will Drive Sterling?
Looking ahead, the Pound Euro (GBP/EUR) exchange rate may come under pressure on Wednesday as the UK releases its latest CPI figures.
Economists forecast that inflation will have held at 1.8% in February, leaving it below the Bank of England’s 2% target and further weakening expectations of a rate hike this year.
However this could easily be overshadowed by potential Brexit developments, as Theresa May weighs her options regarding a third ‘meaningful vote’ after Speaker John Bercow sparked chaos after he blocked another vote unless there are notably changes made to the deal.
Meanwhile the immediate focus for EUR investors is likely to be the release of the Eurozone’s latest PMI figures at the tail end of the week, with the Euro poised to stumble if growth in the bloc’s private sector continued to stall in March.