Pound Sterling Euro Exchange Rate News: GBP/EUR Buoyed as ECB Warns of Risks to Eurozone

GBP/EUR Exchange Rate Drifts Higher Following ECB Stability Review

UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate began to edge higher on Wednesday, with the pairing touching €1.135 in the wake of the European Central Bank’s (ECB) financial stability review.

This saw the central bank warn of downside risks still facing the Eurozone, with slowing global growth and ‘country-specific debt sustainability concerns’ threating the bloc’s financial stability.

Further limiting the appeal of the Euro was a surprise rise in German unemployment, which helped the GBP/EUR exchange rate to drift higher despite rising political uncertainty in the UK.

GBP/EUR Exchange Rate Steady Following Rise in Eurozone Sentiment

UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate has remained flat this afternoon, as EUR investors welcomed a surprise rise in Eurozone sentiment in May.

The European Commission reported it sentiment index climbed from a 32-month low of 103.9 to 105.1 this month, boosted by robust consumer confidence and an improvement in industrial sentiment.

Meanwhile, the Pound held its ground as the focus turn to UK politics, with GBP investors speculating on who may replace Theresa May as PM and how it could impact Brexit.

GBP/EUR Exchange Rate Flat after UK Mortgage Figures Released

The Pound Sterling to Euro (GBP/EUR) exchange rate is rangebound this morning as markets react to the UK’s latest mortgage figures.

At the time of writing the GBP/EUR exchange rate is trading at around €1.1321, virtually unchanged from this morning’s opening rate.

Pound (GBP) Holds Ground as UK Mortgage Approvals Jump

The Pound (GBP) is holding its ground against the Euro (EUR) this morning as markets welcomed the release of the UK’s latest mortgage figures.

According to data published by UK Finance, banks approved 42,989 mortgages last month, rising from 40,564 in March, and beating expectations that home loans would slide to 39,300.

This was the largest rise in mortgages since February 2017 and appeared to suggest that people are beginning to get other their Brexit related concerns.

Euro (EUR) Steady as Result of EU Elections Sidelines Hopes of Eurozone Integration

At the same time, the Euro (EUR) is also stuck in a narrow range this morning as markets continue to figure out how the result of the European parliamentary elections will impact the Eurozone.

While pro-EU parties were able to maintain their majority, advances made by nationalist and Eurosceptic parties have resulted in a more fragmented European Parliament.

This has dampened the appeal of EUR as it indicates that the EU will need to pursue a less ambitious plan for Eurozone integration.

An EU official said:

‘Euro zone integration was not mentioned during the election campaign. It was not an issue, while climate change, migration and social issues were – and this is what is on politicians’ minds.

‘The euro zone integration package to be decided by leaders in June is therefore likely to be minimal and progress on it postponed.’

This is likely to limit the scope of plans for a Eurozone budget, resulting in one that likely focuses on investment rather than creating a safety net for the bloc.

GBP/EUR Exchange Rate Forecast: UK Politics to Continue to Drive Volatility in Sterling?

Looking ahead, in the absence of any notable UK economic data, movement in the Pound Euro (GBP/EUR) exchange rate this week is likely to continue to be driven by UK political developments.

Following Theresa May’s announcement of her resignation on Friday the race to replace her is set to begin in earnest this week, with Sterling likely to fluctuate as markets speculate on who is likely to replace her as Conservative party leader and PM.

Meanwhile the focus for EUR investors tomorrow will be on the release of the European Central Bank’s (ECB) financial stability review, with a dovish outlook from the bank likely to dampen the appeal of the single currency.

However this may be offset somewhat by the release of Germany’s latest labour figures as economists forecast another robust employment report in May.

Matthew Andrews

Contact Matthew Andrews