GBP/EUR Exchange Rate Rises as Labour Push to Prevent No-Deal Brexit
UPDATE: The Pound rose against the Euro following the Labour Party’s announcement that it will hold a vote tomorrow on whether or not to rule out a no-deal Brexit in October.
The Labour Party described the vote in its press release:
‘The motion will use the same procedure that was used earlier this year to block a no-deal Brexit in March. Unlike typical opposition day debates, the motion, if passed, will be binding.’
The Bank of England (BoE) has also seen policymakers become increasing bullish, despite Brexit uncertainty.
Ben Broadbent, the Deputy Governor at the BoE, sounded upbeat, saying:
‘Were the economy to develop in line with our projection … interest rates would probably have to rise by a little more than what was in the curve at the time of the forecast.’
This has provided some uplift for Sterling today, as concerns were running high over the UK’s economy due to ongoing Brexit fears.
However, Labour’s pushing to prevent no-deal, and the BoE’s upbeat projections, has proved altogether Pound-positive.
GBP/EUR Exchange Rate Edges Higher as UK Earnings Figures Rise above Forecast
The Pound Euro (GBP/EUR) exchange rate has risen today and is currently trading around €1.1234 on the inter-bank market.
The Pound (GBP) edged higher against the Euro (EUR) following better-than-expected UK average earnings excluding bonus figures for April, which climbed above the forecast to 3.4%.
These were followed by the UK ILO unemployment rate figures for April, which held steady at 3.8% – a 44-year low.
Matt Hughes, the Deputy Head of Labour at the Office for National Statistics (ONS), commented:
‘Overall, the labour market continues to be strong, with employment still at a joint record rate. However, while the number of vacancies remains high, it has fallen back slightly from the historic highs seen at the turn of the year.’
The Euro (EUR), meanwhile, fell as the UK’s Brexit concerns continue to weigh on market sentiment in the single currency.
Jean-Claude Pris, the Former Head of the European Council’s legal service, commented:
‘[The] People in Brussels are fed up that the political class in the UK has gone a little bit crazy.’
There are no influential Eurozone economic data releases due out today, with many EUR traders instead focusing on global political developments.
EUR/GBP Exchange Rate Sinks as Brexit Concerns Weigh on Euro Sentiment
The Euro (EUR) has remained subdued, with investors paying particular attention to the sentiment surrounding Brexit, which is edging further into gloomy territory with Boris Johnson – the former UK foreign secretary – a favourite to win the Tory leadership race.
Philippe Lambers, a Belgian MEP and member of the European Parliament’s Brexit steering group, commented:
‘For me it is very clear the odds of no-deal Brexit are more than half and clearly if Boris Johnson becomes prime minister the odds will go up again.’
Today saw the release of the Eurozone’s Sentix investor confidence figures for June, which fell considerably below the forecast 2.9 to -3.3.
Manfred Huebner, the Managing Director at Sentix, explained the poor figures saying:
‘The renewed escalation in the US – China trade dispute is having a considerable impact on the Eurozone economy.’
GBP/EUR Forecast: Tory Leadership Race May Weaken Sterling on Heightened Brexit Fears
Euro (EUR) traders will be looking ahead to tomorrow’s publication of the French non-farm payrolls figures for the first quarter, which are expected to hold steady at 0.3%.
Tomorrow will also see the President of the European Central Bank, Mario Draghi, deliver a speech, and with any dovish comments about the Eurozone economy liable to give a boost to the Pound Euro (GBP/EUR) exchange rate.