GBP/EUR Exchange Rate Muted amid Brexit Uncertainty
The Pound to Euro (GBP/EUR) exchange rate is mostly static this morning as fresh Brexit uncertainty leaves Sterling without any clear direction.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1581, virtually unchanged from this morning’s opening levels.
Pound (GBP) in Holding Pattern as Brexit in Limbo
The Pound (GBP) remains side-lined this morning as the UK remains in Brexit limbo ahead of a response from the EU on whether to allow another delay.
Boris Johnson, having failed to persuade MPs to back his accelerated timetable for rushing the legislation for Brexit through parliament opted to ‘pause’ his Withdrawal Agreement Bill on Tuesday.
As a result, the chances of the UK leaving with a deal by 31 October are now almost zero, placing the onus back on the EU to decide whether Brexit should be delayed yet again.
Johnson was compelled to write to the EU asking for a three-month extension after he was unable to pass his Brexit deal on Saturday.
European Council President Donald Tusk has urged EU leaders to accept this extension in order to avoid a damaging no-deal Brexit.
However some within the EU are through to be seeking a shorter extension of just a couple of weeks in order to keep MPs focus on the deal in front of them.
EU ambassadors agree that they should accept Boris Johnson’s request for more time on Brexit but can’t settle on how long he will get https://t.co/Mi6fs7ZW8g
— Bloomberg Brexit (@Brexit) October 24, 2019
The Pound will likely remain in a holding pattern until Friday, when EU leaders are expected to give a formal response.
Euro (EUR) Struggles as Eurozone Close to Stagnation
The Euro (EUR) is broadly flat this morning in response to another gloomy Eurozone PMI print.
According to data published by IHS Markit, growth in the Eurozone remained dangerously close to stagnation in October.
The ongoing slump in the manufacturing sector continued to be the main drag on the Eurozone and was blamed for the recent malaise in the service sector.
Chris Williamson, Chief Business Economist at IHS Markit, said:
‘The Eurozone economy started the fourth quarter mired close to stagnation, with the flash PMI pointing to a quarterly GDP growth rate of just under 0.1%.
‘The manufacturing downturn remains the fiercest since 2012, and continues to infect the service sector, where October saw the smallest increase in new work for almost five years.’
GBP/EUR Exchange Rate Forecast: Draghi to Bow Out from ECB with Final Rate Decision
Still to come today we have the European Central Bank’s (ECB) latest rate decision, which is significant for also being the last with Mario Draghi at the helm.
In his eight years as ECB President Draghi has been credited for saving the Euro, and creating 11 million jobs in the wake of the Eurozone crisis.
To do so however he has slashed interest rates to record lows and introduced a massive quantitative easing programme.
As it comes time to hand over the reins to his successor Christine Lagarde, EUR investors will be looking for any clues about what to expect in 2020 and for any potential fallout from Draghi’s controversial decision to re-introduce QE in September.