GBP/EUR Exchange Rate Falls Following Shock Drop in German Inflation
UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate started to slide on Thursday afternoon, moving down to around €1.1660 following the publication of Germany’s latest CPI figures.
According to data published by Destatis, German inflation unexpectedly fell from 1.5% to an 11-month low of 1.3% in March, missing expectations of a modest rise and dragging on the Euro as it fueled concerns over a slowdown in the Eurozone’s largest economy.
#ConsumerPrices in March 2019: 1.3% rise on March 2018 expected. https://t.co/2krg6SW9zR #inflation
— Destatis news (@destatis_news) March 28, 2019
However the Pound was in no position to take of advantage of the Euro’s weakness this afternoon as a cloud of Brexit uncertainty continued to hang over Sterling, amid confusion over a possible Brexit vote on Friday, that would no apparently be the third meaningful vote on Theresa May’s withdrawal deal.
GBP/EUR Exchange Rate Subdued as DUP Refuses to Budge on Brexit Deal
The Pound Sterling to Euro (GBP/EUR) exchange rate is stuck in a neutral range this morning as hopes of Theresa May finally passing her Brexit deal have been dampened by the Democratic Unionist Party’s (DUP) opposition.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1678, virtually unchanged from this morning’s opening levels, but almost a cent below the week’s best levels.
Pound (GBP) Rangebound as Support for PM’s Brexit Deal Likely to Fall Short
The Pound (GBP) is rangebound against the Euro (EUR) and the majority of its other peers this morning as markets remain doubtful of the chances of Theresa May passing her Brexit deal after the DUP refused to budge in its opposition to the deal.
It's a 'no' from the DUP at this stage – big blow for Number 10
— Laura Kuenssberg (@bbclaurak) March 27, 2019
This has left investors appear increasingly reluctant to trade in Sterling this morning, as the continued deadlock in Parliament heightens uncertainty over how Brexit will proceed.
Chris Rodgers, senior fund manager at Sanlam Investments said:
‘Uncertainty continues to weigh heavily on the UK economy, and as we hurtle toward the cliff edge, all options are still possible. While Parliament has made it clear that a no-deal Brexit is unacceptable, it remains firmly on the table if the Government continues to procrastinate and fudge.’
The GBP/EUR exchange rate briefly climbed to a fresh 22-month high on Wednesday after May’s offer to resign as Prime Minister if her deal successfully passes through Parliament appeared to win over a lot of rebel MPs.
However Sterling quickly fell back after Parliament rejected all of the eight alternative Brexit options put forth by MPs.
Euro (EUR) Flat as Eurozone Business Confidence Slides
At the same time the Euro (EUR) is struggling to find support this morning following the release of the Eurozone’s latest business confidence figures.
According to data published by the European Commission, the Eurozone’s business climate index slumped from 0.69 to 0.53 this month, falling to its worst level since November 2016 as firms reported s significant decline in export orders.
This is likely to fuel concerns that the current slowdown in the Eurozone may drag on for longer than expected.
GBP/EUR Exchange Rate Forecast: Will there be a Third Meaningful Vote?
Looking ahead, Brexit is likely to continue to drive movement in the Pound Euro (GBP/EUR) exchange rate through the latter half of the week amid speculation that Theresa May will seek to hold a third meaningful vote on her Brexit deal.
However it still remains unclear whether such a vote will go ahead, with the PM repeatedly stating that a third vote would not be held unless it appeared likely to pass.
In the meantime the release of Germany’s latest CPI figures may prompt some movement in the Euro later this afternoon, with the single currency potentially sliding if a subdued inflation reading exacerbates concerns over a slowdown in the Eurozone’s largest economy.