GBP/EUR Exchange Rate Steadies as UK Construction Drops
The Pound Euro (GBP/EUR) exchange rate is down today and is currently trading at €1.1401 on the inter-bank market.
Sterling (GPB) fell against the Euro (EUR) after the publication of the UK construction PMI figures for January, which showed a worse-than-expected fall to 50.6 – a 10‑month low.
Phil Harris, a director at BLP Insurance, commented:
‘[Scraping] in just above the growth threshold of 50.0 [is] an achievement in itself given the festive seasonal slowdown and the gloomy political and business backdrop.’
The Euro managed to gain on the Pound today despite some poor Eurozone PPI figures for January, which fell below expectations to -0.8%.
Euro Pound (EUR/GBP) Exchange Rate Increases Despite Rising Tensions between France and Italy
Euro investors are becoming increasingly cautious after the Italian economy slipped into recession last week following poor GDP figures.
Tensions further increased today, as Jean-Yves Le Drain, the French Foreign Minister, discussed the two nations’ differing opinions on finance and migration, commenting:
‘When we arrive at a moment when action is needed, Italy can bend.’
This has followed on from an escalating feud between Paris and Rome after the two respective nations quarrelled over comments made by Italian Deputy Prime Minister Matteo Salvini about France’s presence in Africa.
Mr Salvini had previously stated:
‘In Africa some take away wealth from the people and the continent and France is among them.’
GBP/EUR Exchange Rate Falls as May Prepares to Face EU Over Irish Backstop
Meanwhile in Brexit news, UK Prime Minister Theresa May will be gathering Tory rebels at Downing Street today to discuss aspects of her Brexit withdrawal deal before heading over to Brussels, where she is expected to face fierce resistance to reopening the already agreed-upon deal.
May is set to visit to Ireland tomorrow, as the government continues to attempt to clarify the controversial Irish backstop issue before heading over to Brussels.
David Gauke, the Conservative MP and Justice Secretary, commented:
‘The determination that the Prime Minister has set out is to deliver that on the 29th March but if we are going to do that then MPs do need to be backing a deal in short order, and that’s MPs both on my own side and also in other parties.’
GBP traders are becoming increasingly cautious as the EU has remained resolute on the Irish border issue, with May recently saying that she would be ‘battling for Britain and Northern Ireland’ despite the EU’s reluctance to change the Brexit agreement, particularly with regards to the Irish backstop.
GBP/EUR Outlook: May’s Brexit Renegotiations to Remain in Spotlight
GBP traders are looking ahead to tomorrow’s publication of the BRC like-for-like retail sales figures for January, which are expected to decrease.
These will be followed by the release of the UK Markit services PMI figures for January which are also expected to decrease, potentially weakening Sterling further.
EUR investors, meanwhile, will be looking ahead to the publication of the Eurozone’s release of the Markit services PMI figures tomorrow, with any signs of an increase potentially bolstering the Euro.
The GBP/EUR exchange rate is expected to remain sensitive to Brexit concerns over this week as the UK and EU appear poles apart over the Irish backstop issue.
Any further signs that May’s Brexit deal could be rejected will likely see the Pound plummet.