EUR/GBP Exchange Rate Edges Higher as UK Brexit Fears Weaken Sterling
The Euro Pound (EUR/GBP) exchange rate rose to around €0.884 today despite September’s German Markit manufacturing PMI falling deeper into contraction territory from 43.5 to 41.4 and the Eurozone’s composite PMI easing to 40.4.
Chris Williamson, Chief Business Economist at IHS Markit, commented:
‘The Eurozone economy is close to stalling as a deepening manufacturing downturn shows further signs of spreading to the services sector… With survey data like these, pressure will grow on the [European Central Bank] to add to its recent stimulus package.’
However, the Euro (EUR) gained on a weak Pound (GBP) despite the gloomy stats, as no-deal Brexit concerns continued to haunt UK markets.
Nevertheless, EUR gains are likely to remain short-lived as the shadow over the German economy continues to deepen and the odds of an economic recovery diminish.
Mario Draghi, President of the European Central Bank (ECB), will deliver his final testimony at the European Parliament later today, with any dovish comments about the bloc’s economic outlook likely to weigh further on the Euro.
GBP/EUR Exchange Rate Sinks as Boris Johnson Downplays Brexit Breakthrough
The Pound (GBP) remained subdued against the Euro (EUR) as Prime Minister Boris Johnson downplayed a Brexit breakthrough at the UN summit in New York this week, saying:
‘I would caution you all not to think this is going to be the moment. I don’t wish to elevate excessively the belief that there will be a New York breakthrough. I’m not getting pessimistic – we will be pushing ahead, but there is still work to be done.’
No-deal Brexit fears continue to weigh on UK markets, with the Conservative Government unyielding in its approach to the UK’s withdrawal on October 31.
Meanwhile, doubts persist over the UK Supreme Court ruling on the legality of parliamentary prorogation, with Boris Johnson expected to ignore any new legislation.
Conservative MP Rory Stewart warned:
‘The danger is then we would move to a more Trumpian form of politics where he would claim to represent the people against parliament.’
EUR/GBP Outlook: Euro Could Sink if Boris Johnson Secures Brexit Deal Compromise
Euro (EUR) traders will be looking ahead to tomorrow’s German IFO business climate figure for September, which is expected to rise from 94.3 to 94.5.
Tomorrow will also see the release of September’s German IFO business expectations.
Meanwhile, Sterling investors await tomorrow’s public sector net borrowing for August which is expected to improve from £-1.971 billion to £6.650 billion and could see the Pound claw back some recent losses.
The EUR/GBP exchange rate could sink if Boris Johnson successfully secures a compromise Brexit deal during the UN summit this week.