GBP/EUR Exchange Rate Rises as May Says Local Elections Pushes MPs to ‘Deliver Brexit’
UPDATE: The Pound has risen against the Euro following comments from Theresa May today that the local elections indicated that voters wanted MPs to ‘deliver Brexit’, buoying market optimism in Sterling as May pushes against the political deadlock.
This has, however, increased pressures on May to resign after suffering losses at the local election level, which shows that the electorate’s confidence in the major parties is slipping.
The Euro, however, has failed to claw back any gains despite the Eurozone’s inflation figures improving in April.
GBP/EUR Exchange Rate Rangebound as Weak Eurozone Manufacturing Weighs on Euro
The Pound Euro (GBP/EUR) exchange rate is rangebound today and is currently trading around €1.1663 on the inter-bank market.
The Euro (EUR) failed to make any gains on the Pound (GBP) following the publication of the flash yearly Eurozone’s Consumer Price Index figures for April, which rose above the forecast 1.6% to 1.7%.
These were followed by the Eurozone’s preliminary Core CPI figures for April, which also increased.
The Eurozone’s PPI figures for March, however, disappointed, falling by -0.1% and weighing on confidence in the single currency.
Yesterday’s publication of the Eurozone’s manufacturing data, which remained in contraction, has prevented to Euro from gaining against the Pound today.
Chris Williamson, the Chief Business Economist at IHS Markit, was gloomy about the Eurozone economy, saying:
‘The downturn remains the fiercest in Germany, with Italy and Austria also in decline and France stagnating. Spain’s expansion remains only modest.’
The Pound, meanwhile, has stabilised as the cross-party Brexit talks remain in political deadlock, with the local elections also highlighting the fact that the two major parties are losing favour among the electorate.
GBP/EUR Exchange Rate Flat as UK Services PMI Rises out of Contraction amid Brexit Fog
Today saw the publication of the UK Markit Services PMI figures for April, which rose out of contraction to 50.4 – narrowly missing the 50.5 forecast.
Duncan Brock, a Director at the Chartered Institute of Procurement and Supply, commented:
‘Whether this is triumph of hope over experience, or grim tenacity, the sector has a poor environment of support as the Brexit fog continues to envelope the UK economy.’
The Labour Party, according to the Labour MP Barry Gardiner, is attempting to ‘bail out’ the Conservatives over Brexit in a bid compromise and break the political deadlock between the two parties.
Mr Gardiner said:
‘[Theresa May’s] lost control of her party … lost any chance of getting her deal through Parliament, has had to come to us and say ‘please, I now need to listen to the ideas that you’ve been putting forward.’
As this week draws to a close, Sterling has failed to benefit of any signs of a cross-party consensus emerging, with both parties failing to meet a compromise over Brexit.
GBP/EUR Forecast: Sterling Could Rise on Cross-Party Brexit Consensus
Euro traders will be looking ahead to Monday’s publication of the Eurozone’s Markit PMI Composite figures for April, which are expected to remain static.
Monday will also see the printing of the Eurozone’s retail sales figures for March, which, however, are expected to ease.
UK markets will be closed on Monday for the Early May Bank Holiday.
Brexit developments will remain in focus next week, with Theresa May having insisted that cross-party talks would conclude.
The GBP/EUR exchange rate could potentially benefit from any indications that the two major parties agree upon a consensus, for this would effectively end the current political stalemate.