GBP/AUD Extends Losses on Concerns of Brexit Talks Collapsing

Pound to Australian Dollar Exchange Rate Continues to Tumble on Brexit and Trade Developments

UPDATE: The Pound to Australian Dollar (GBP/AUD) exchange rate continued to shed the gains seen last week throughout today’s session, as investors became anxious that cross-party Brexit negotiations would fail.

Reports suggest that talks could collapse as parties begin to prioritise EU elections instead left the Pound unappealing.

The Australian Dollar’s (AUD) appeal was initially limited on concerns that US-China trade negotiations would fall through as well, but US President Donald Trump made positive comments about the possibility of a deal which kept the Australian Dollar buoyed towards the end of the day.

Pound Euro (GBP/EUR) Exchange Rate Slides as UK to Take Part in European Elections and German Industrial Production Surprises

UPDATE: The Pound Sterling Euro (GBP/EUR) exchange rate fell and the pairing is currently trading at an inter-bank rate of €1.1635.

On Wednesday, data revealed that German industrial production rose unexpectedly which likely buoyed the single currency.

Production rose by 0.5% in March as there was a higher production of consumer goods and construction.

Meanwhile, on Tuesday it was announced that the UK would take part in European elections later this month.

This likely dampened sentiment in the Pound as it implies Brexit cross-party discussions are making very little progress.

Pound Euro (GBP/EUR) Exchange Rate Edges Down as German Growth Forecasts Slashed to 0.5%

UPDATE: The Pound Sterling Euro (GBP/EUR) exchange rate slips and the pairing is currently trading at an inter-bank rate of €1.1673.

The European Commission slashed growth forecasts for two of the largest economies in the Eurozone, Germany and Italy.

The EC’s economic report has forecast German GDP will only expand by 0.5% in 2019, down from its prediction of 1.1% growth just three months ago.

Further dampening sentiment in the single currency, the German construction PMI revealed that the index slipped from March’s 14-month high to 53.

Data showed there was slower growth in commercial and housing activity and measures of new orders softened.

However, the latest reading of 53 was still above the long-run average of 47.8.

Meanwhile, the EC estimated that UK growth in 2019 will come in at 1.3%.

Pound Euro (GBP/EUR) Exchange Rate Muted as PM Faces Pressure to Avoid a Cross-Party Deal

UPDATE: The Pound Sterling Euro (GBP/EUR) exchange rate remains flat and the pairing is currently trading at an inter-bank rate of €1.1683.

Reports in the Daily Telegraph have suggested that the Prime Minister has been warned that MPs will begin moves to remove her if she agrees to a Brexit deal with Labour.

Theresa May wants to sign off on an agreement to avoid sending new MEPs to the European Parliament, however there is little appetite for this move for this among Tory backbenchers.

Senior sources within the Conservatives have said that she will be ‘gone very quickly’ if she bends towards Labour’s demands for a customs union with the European Union.

Pound Euro (GBP/EUR) Exchange Rate Flat as German Factory Orders Increase

The Pound Sterling Euro (GBP/EUR) exchange rate remains muted today and the pairing is currently trading at an inter-bank rate of €1.1693.

Data released on Tuesday morning revealed that German factory orders rebounded in March after contracting for four consecutive months.

However, the increase was smaller than forecast, meaning this is only a partial recovery.

Orders rose by 0.6% despite a forecast rise of 1.4%, reducing overall sentiment in the single currency.

The accompanying report suggested that the German economy was a chief area of weakness as total domestic orders fell by -4.2%.

Sterling (GBP) Flat as Calls for PM to Resign Increase

Reports emerged today that the Prime Minister Theresa May is due to meet Sir Graham Brady of the influential 1922 Committee of backbenchers, who is expected to ask her how long she plans to stay in her job.

This comes amid further calls for the Prime Minister to set a clear resignation date following last week’s disastrous local election results for the Tories.

Meanwhile, cross-party Brexit talks between the Conservatives and Labour are set to continue, with some commentators saying they expect the talks to be wrapped up this week.

Euro (EUR) Muted as Eurozone Growth Subdued

On Monday, data revealed that subdued growth in the Eurozone continued in April as the bloc’s PMI composite came in at 51.5.

This was the lowest reading for three months, even though continuous growth in the private sector economy has been recorded for nearly six years.

Commenting on the data, Chief Business Economist at IHS Markit, Chris Williamson said:

‘The final Eurozone PMI for April came in slightly higher than the flash estimate, though still indicated that the economy lost a little momentum at the start of the second quarter and that growth remains worryingly lacklustre. The survey is indicative of the economy growing at a quarterly rate of approximately 0.2%, but manufacturing remained mired in its steepest downturn since 2013 and service sector growth slipped lower.’

Pound Euro Outlook: Will the GBP/EUR Exchange Rate Rise on Disappointing German Industrial Production?

Looking ahead to the start of Wednesday’s session, the Pound (GBP) could rise against the Euro (EUR) following the release of the UK like-for-like retail sales figures.

If sales rise higher than forecast, Sterling could be provided with an upswing of support.

Meanwhile, the Euro could slide following the release of the German industrial production figures.

If industrial production slides further than forecast in March, it could cause the Pound Euro (GBP/EUR) exchange rate to rise.

Millie Empson

Contact Millie Empson