Pound Sterling to Euro (GBP/EUR) Exchange Rate Rises as UK GDP Beats Expectations

Pound to Euro (GBP/EUR) Exchange Rate Up Ahead of European Central Bank (ECB) Decision

Due to market anticipation for today’s major session, the Pound Sterling to Euro (GBP/EUR) exchange rate hasn’t moved too far from this week’s opening levels, but is currently up on the day. The pair may be in for significant movement later though, depending on upcoming Brexit and ECB news.

Since opening this week near the interbank level of €1.16, GBP/EUR has fluctuated within a relatively tight region as both currencies fail to find the strength they need to capitalise on their rival’s weaknesses.

Movement has been much more limited than last week’s broad fluctuations, as investors are hesitant to make any big moves on Sterling (GBP) ahead of what could be a major session for the future of the Brexit process.

Meanwhile, the Euro’s (EUR) strength has also been limited. Recent Eurozone data has done little to make investors more confident in the bloc’s economic outlook, so investors are anxious ahead of today’s European Central Bank (ECB) policy decision.

The latest UK GDP figures revealed a slight rise in March of 0.2% against expectations there would be no movement, helping GBP/EUR move up to €1.1595 on the inter-bank market.

Pound (GBP) Exchange Rate Movements Anxious as Markets Await Brexit Delay

Since markets opened this week, investors have been hesitant to make any big movements on the Pound (GBP) as broad uncertainty persists with mere days to go until the formal Brexit date.

The UK is currently set to leave the EU on Friday and there is still no deal in place.

While analysts believe that a Brexit delay is likely to be agreed today, and this has largely been priced into the Pound already, the possibility of a no-deal Brexit happening on Friday still remains until a delay is confirmed.

This has left investors highly anxious ahead of today’s key EU summit. UK Prime Minister Theresa May has been asking for another extension to Brexit and the EU has indicated it will offer an extension until the end of 2019, but this is not confirmed.

Euro (EUR) Exchange Rates Edge Higher Ahead of European Central Bank (ECB)

The European Central Bank (ECB) will hold its April policy decision in the early afternoon, and following weeks of mixed data analysts are doubtful that the bank will have much reason to be hawkish.

The bank’s more dovish tone in its previous decision, when it announced new quantitative easing (QE) plans, knocked the Euro (EUR) lower.

Investors are hesitant to buy the Euro too much despite some decent Eurozone data near the beginning of the week, due to concerns that the bank would continue to ramp up its dovish rhetoric.

Germany’s recent manufacturing and trade stats have been concerning, and the US has threatened tariffs for EU trade. Eurozone bond yields have also been low in recent weeks.

However, Sentix’s latest Eurozone investor confidence data beat expectations and last week’s Eurozone services data bolstered hopes of a rebound in economic activity.

Pound to Euro (GBP/EUR) Exchange Rate Outlook Could Shift Today

Today has the potential to be the most important session this week for the Pound to Euro (GBP/EUR) exchange rate.

Pound (GBP) investors will focus on the day’s EU summit and Brexit news, while the Euro (EUR) will be influenced by the European Central Bank’s (ECB) April policy decision.

If the UK and EU agree to delay the Brexit process until the end of the year, the Pound will see some relief and is more likely to be able to advance on other factors.

However, if the nations are unable to agree on a Brexit delay it would mean a no-deal Brexit becomes reality and the Pound would plummet.

The European Central Bank, on the other hand, could influence the market’s Eurozone economic outlook.

If the bank continues to play up a dovish stance and concerns about slowing economic growth deepen, the Euro (EUR) may be in for further weakness. This would make it easier for GBP/EUR to rise if a Brexit delay is agreed.

However, if the bank is cautiously optimistic that the Eurozone is recovering from the economic slowdown, the Pound to Euro (GBP/EUR) exchange rate may be in for further losses as the Euro would strengthen.

Josh Jeffery

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