GBP/EUR Exchange Rate Increases on Eurozone’s Economic Woes
The Pound Euro (GBP/EUR) exchange rate edged higher today and is currently trading around €1.1642 on the inter-bank market.
The Euro (EUR) fell against the Pound (GBP) following the release of the German Manufacturing PMI figures for March, which fell deeper into contraction at 44.1 against February’s 47.6.
Phil Smith, a Principal Economist at IHS Markit, commented:
‘The final print of March’s manufacturing PMI numbers makes for uncomfortable reading, with the downturn in the sector even worse than initially suggested by the ‘flash’ data. Manufacturing output fell markedly and at the fastest rate since 2012, with the consumer goods sector joining intermediate and capital goods producers in contraction.’
These were followed by weaker-than-expected Eurozone Markit Manufacturing PMI figures for March. Sinking below the ‘flash’ forecast to 47.5 this has weighed on market confidence in the single currency today.
Today also saw the printing of the Eurozone’s CPI figures for March which came in at 1.4%.
Sterling, meanwhile, has benefited from rising hopes on the breaking of the Brexit stalemate today, with MPs due to partake in the second phase of ‘indicative votes’ this evening, which will help determine alternatives to Prime Minister Theresa May’s withdrawal deal.
GBP/EUR Exchange Rate Climbs on Hopes of Majority Votes for UK-EU Customs Union
The Pound has benefited from the possibility that MPs could vote for a customs union today – which is likely to make up the selection of ‘indicative votes’ – which would potentially see the UK leave the EU with a deal on 22 May.
Guy Verhofstadt, the European Parliament’s Brexit Coordinator, commented:
‘There was almost a majority in favour of a customs union with the EU. What we expect is that a proposal could reach a majority around the customs union and then we are prepared, on the EU side, to renegotiate the declaration and to include that customs union therein.’
Today, meanwhile, saw the publication of the UK Markit Manufacturing PMI figures for March which came in much higher than expected at 55.1, buoying market confidence in the Pound.
Duncan Brock, a Group Director at the Chartered Institute of Procurement & Supply, said:
‘Businesses on both sides of the channel intensified their efforts this month to accumulate materials with the fastest increase in the stock building of finished goods since 1992, as the UK hurtled towards the Brexit deadline.’
GBP/EUR Forecast: Sterling Could Rise on MP’s Brexit Consensus
Euro traders will be looking ahead to tomorrow’s release of the Eurozone’s unemployment rate figures for February, which are expected to remain static at 7.8%.
Pound traders, however, will be tomorrow’s printing of the UK Markit Construction PMI figures.
The GBP/EUR exchange rate, however, will determined this week by the outcome of tonight’s important parliamentary vote. Any signs of a consensus emerging amongst MPs tonight could heighten the chances of the UK leaving the EU with a deal, and this would prove Pound-positive.