GBP/EUR: Pound Continues to Climb away from Lows amid Lack of Fresh Euro Support

Pound to Euro Exchange Tests Multi-Month-Lows amid Brexit Jitters and Strong German Data

UPDATE: While this morning’s Eurozone data was highly mixed, deepening Brexit jitters and some surprisingly strong German wholesale prices data meant the Pound to Euro (GBP/EUR) exchange rate touched a new two month low this morning.

The Pound (GBP) saw even weaker performance this morning following reports that some MPs from the UK Conservative Party had written to Prime Minister Theresa May asking her to drop cross-party Brexit negotiations.

The Euro (EUR) briefly took advantage of this Pound weakness as Germany’s April wholesale prices report beat expectations.

However, Euro strength softened slightly after ZEW’s German and Eurozone economic sentiment index figures printed surprising contractions in May.

Pound to Euro Exchange Rate Seeing Modest Gains Today as Investors Recoil from Last Week’s Plummet

UPDATE: The Pound to Euro (GBP/EUR) exchange rate continued to edge higher around midday, despite a lack of fresh support for Sterling (GBP).

Amid speculation that a second referendum of some kind was becoming more likely, investors bought the cheap Pound back slightly from its weekend lows.

Strength in the Euro’s safe haven rival, the US Dollar (USD), is keeping the shared currency pressured.

Pound to Euro (GBP/EUR) Exchange Rate Rebounds as Euro Rivals Strengthen

Following last week’s steep slump, the Pound Sterling to Euro (GBP/EUR) exchange rate’s bearish trend has come to an end for now. When markets opened on Monday, the pair saw steadier movement and edged away from weekend lows.

Essentially shedding all the gains seen at the beginning of the month, GBP/EUR opened last week near its best levels in over a year at the interbank level of €1.17, before slumping almost two cents.

For now, GBP/EUR is avoiding further losses and is edging higher this morning, but its potential for gains is limited due to lingering uncertainty over Brexit and the stability of Britain’s government weighing on the Pound (GBP).

The Euro (EUR), on the other hand, lacks drive for now as investors back rivals like the US Dollar (USD) and await various Eurozone ecostats due for publication later in the week.

Pound (GBP) Exchange Rates Steady after Last Week’s Plummet

Investors sold the Pound (GBP) en masse throughout the entirety of last week, as hopes for a cross-party Brexit deal faded and were replaced with uncertainty over how the upcoming EU elections could undermine Britain’s major political parties.

As the EU elections approach, officials are putting more focus into campaigning and less focus on finding a deal that would be more likely to pass through Parliament.

Sterling did find a little Monday morning support in comments made by the Labour Party’s Shadow Brexit Secretary Sir Keir Starmer.

Starmer said that any potential cross-party deal would likely not be accepted by Parliament without a confirmatory referendum of some kind.

This caused a slight boost in hopes for a second referendum, but political uncertainty generally limited the Pound’s potential for gains.

Euro (EUR) Exchange Rates Slip Back from Weekend Highs

Demand for the Euro (EUR) gradually improved throughout last week, as the latest Eurozone data continued to boost hopes that the bloc’s economy may not have been as badly hit by the global economic slowdown as feared.

In particular, Germany’s growth may have been better than investors feared in the first quarter of 2019, as March’s industrial production report saw a solid 0.5% growth rather than the predicted -0.5% contraction.

On top of this, while the Eurozone’s manufacturing sector saw concerning performance in April, the bloc’s services sector was a little more resilient than projected.

Investors sold the Euro a little from its highs when markets opened on Monday though. Concerns about the health of the Eurozone economy still persisted.

On top of this the shared currency was pressured by a little fresh support for the US Dollar (USD). The Euro and US Dollar have a negative correlation and the Euro often weakens in times of US Dollar strength.

Pound to Euro (GBP/EUR) Exchange Rate Traders Anticipate German Growth Report

For now, the Pound to Euro (GBP/EUR) exchange rate is rebounding slightly from its lows on some Euro weakness.

While Pound (GBP) investors will remain focused on Brexit news, Euro (EUR) traders will turn their attention towards upcoming Eurozone data.

A range of notable German datasets will be published over the coming days, with inflation, wholesale prices and economic sentiment tomorrow, and key growth rate data on Wednesday.

As Germany is the Eurozone’s biggest economy and concerns of a German slowdown have been influential for the Euro lately, the Euro could see stronger performance this week if they beat expectations.

Upcoming Eurozone data could also influence the Euro of course, with Eurozone industrial production and economic sentiment coming out tomorrow, growth data on Wednesday, trade balance stats on Thursday and the bloc’s April inflation rate on Friday.

On top of Eurozone data, any surprising developments in Brexit or politics could also cause some movement in the Pound to Euro (GBP/EUR) exchange rate this week.

Josh Jeffery

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