GBP/EUR Exchange Rate Stabilises as German Factory Orders Slump
The Pound Euro (GBP/EUR) exchange rate has stabilised today and is currently trading around €1.1724 on the inter-bank market.
The Euro (EUR) held steady against the Pound (GBP) following disappointing German factory orders figures for February which came in at -4.2%.
These were followed by the year-on-year figures, which also slipped far below expectation by -8.4%.
Carsten Brzeski, a Chief Economist at the Dutch bank ING, said they were ‘simply awful’, commenting:
‘Devastating new orders data just undermined any hopes for an industrial rebound… This is the positive reading. The negative reading is that the German industry should prepare for more bad news.’
Many Euro traders, however, will be awaiting the publication of the European Central Bank’s monetary policy meeting accounts this evening, and with any further indications of dovishness from the bank about the Eurozone’s economy we could see the single currency weaken.
Sterling, meanwhile, has steadied following last night’s vote in which a bill to prevent a no-deal Brexit scenario passed by just one vote.
This will now force Prime Minister Theresa May to request an extension to Article 50 should her deal be rejected.
GBP/EUR Exchange Rate Steadies as Traders’ Nerves Ease on Ruling out of No-Deal
News that a no-deal Brexit could be avoided has eased many Pound trader’s nerves today.
However, there is still a lingering threat that Theresa May could fail to gain the necessary parliamentary backing for her withdrawal agreement next week.
The clock is also ticking down to 12 April, which is the official exit date for the UK from the EU.
Jean-Claude Juncker, the President of the European Commission, warned the UK yesterday, saying:
‘A ‘no-deal’ at midnight on the 12th of April is now a very likely scenario… UK will be affected more than EU because there is no such thing as a ‘managed’ or ‘negotiated no-deal’ and there is no such thing as a ‘no-deal transition’.’
Divisions are increasingly showing up within the Conservative Party following Theresa May’s cooperation with the Labour leader, Jeremy Corbyn.
Mark Francois, the pro-Brexit Tory MP, exploded with rage following last night’s vote, saying:
‘It’s difficult to argue that you’ve had an extremely considered debate when you’ve rammed the bill through the House of Commons in barely four hours. That is not a considered debate, that is a constitutional outrage.’
GBP/EUR Forecast: Sterling Could Benefit from Cross-Party Brexit Consensus
Euro traders will be looking ahead to the Eurogroup meeting tomorrow, and any indications that a no-deal Brexit is becoming increasingly likely could weaken the pairing.
Tomorrow will also see the publication of the German industrial production figures for February, which are expected to increase.
The GBP/EUR exchange rate will however remain dictated by Brexit developments, and as the leaving date draws ever nearer, any compromise emerging from Parliament – or through cross-party talks – could benefit Sterling.