Falling Odds of No-Deal Brexit Benefit Pound Sterling Euro (GBP/EUR) Exchange Rate
As markets reassessed the odds of Boris Johnson’s Brexit deal making it through parliament the Pound Sterling to Euro (GBP/EUR) exchange rate bounced back.
Even though MPs failed to approve the deal during Saturday’s sitting investors saw reason to lower the odds of a no-deal scenario, to the benefit of Pound Sterling (GBP).
With the government pushing for a fresh ‘meaningful vote’ on the deal, in order to gauge support, the odds of an imminent agreement appeared to increase.
However, as it remains to be seen whether Johnson has enough votes to push through the deal a sense of uncertainty continues to hang over the UK outlook.
German Producer Price Uptick Fails to Bolster Euro (EUR) Exchange Rates
While the latest German producer price index showed an unexpected improvement on the month this failed to encourage demand for the Euro (EUR), meanwhile.
A return to positive territory was not enough to shore up the single currency this morning, especially as the year-on-year index saw a fresh slip.
With the Eurozone’s powerhouse economy struggling to demonstrate signs of strengthening inflationary pressure EUR exchange rates stalled.
All in all, this is unlikely to give the European Central Bank (ECB) any incentive to leave monetary policy on hold for longer, boosting the risk of further action coming before the end of the year.
Fresh signs of weakness from the Spanish economy also put pressure on the Euro, with industrial production showing a sharp -1.9% decline on the year.
Lack of Brexit Clarity Could Drive GBP/EUR Exchange Rate Lower Once Again
Unless markets see a greater degree of clarity with regards to Brexit in the days ahead the GBP/EUR exchange rate looks vulnerable to renewed selling pressure.
If Johnson secures sufficient support for the current deal this could see the Pound pushing higher across the board as investors see hope of an end to the long-running saga.
On the other hand, another defeat for the government would leave GBP exchange rates exposed to a fresh bout of selling pressure.
The mood towards the Pound could equally sour in response to Tuesday’s CBI industrial trends orders and business optimism indexes.
With forecasts pointing towards fresh evidence of a decline in business sentiment the GBP/EUR exchange rate looks set to stumble in the wake of the data.
Weak Eurozone Consumer Confidence Forecast to Weigh on Euro Demand
The appeal of the Euro could falter further in the coming week, though, if October’s Eurozone consumer confidence index proves underwhelming.
Confirmation that the index slipped deeper into negative territory at the start of the fourth quarter could stoke additional worries over the strength of the economic outlook.
As global trade tensions continue to weigh on Eurozone growth evidence of weaker domestic demand is likely to put the Euro under further pressure.
On the other hand, any improvement in the confidence index may put a dampener on the GBP/EUR exchange rate.