GBP/EUR Exchange Rate Falls despite the German Economic Ministry’s Gloomy Forecast
The Pound Euro (GBP/EUR) exchange rate eased today and is currently trading around €1.1225 on the interbank market.
The Euro (EUR) rose against the Pound (GBP) following the publication of the German inflation rate figures for May, which came in as forecast as 0.2%.
These were followed by the annual German harmonized index of consumer prices for May, which held steady at 1.3%.
However, Germany’s Economic Ministry said in its statement today:
‘After significant growth in gross domestic product in the first quarter, the prospects for the second quarter remain subdued. After the muted developments in the second quarter, positive influences should take hold more forcefully with a gradual improvement of the external environment.’
This has left many Euro traders remaining skittish, as global trade tensions continue to weigh on export-dependent industry’s which make up the bulk of Germany’s economy.
Today also saw the printing of the Eurozone’s industrial production figures for April, which eased at -0.5%.
GBP/EUR Exchange Rate Decreases on Labour’s No-Deal Brexit Block Defeat
The Pound, meanwhile, sank following yesterday’s defeat for the Labour Party.
This involved parliamentary vote on a motion that would effectively block the future Prime Minister from forcing a no-deal Brexit in October, however this was overturned by a majority of 11 MPs.
Keir Starmer, the shadow Brexit Secretary who tabled the vote on the motion, commented in defiance:
‘Labour stands ready to use whatever mechanism it can to protect jobs, the economy and communities from the disastrous consequences of a no-deal Brexit. Any Tory leadership candidate should know that parliament will continue to fight against no deal.’
Today saw the printing of the UK RICS housing price balance figures for May, which rose to a better-than-expected -10%.
RICS said in its statement:
‘Much of the anecdotal insight provided by respondents is still quite cautious, reflecting concerns about both the underlying political and economic climate.’
There are no other UK economic data releases due out today, and with the Conservative leadership race in focus, many Sterling traders are remaining jittery over no-deal Brexit fears.
GBP/EUR Forecast: Sterling Could Sink on Renewed No-Deal Brexit Fears
Sterling traders will be looking ahead to tomorrow’s speech by the Governor of the Bank of England, Mark Carney, and with any dovish comments about the UK’s economy this could see the GBP/EUR exchange rate sink further.
Euro investors, meanwhile, will be awaiting tomorrow’s French inflation figures for May.
These will be followed by the Italian industrial orders figures for April, and with any improvement, this could provide uplift for the Euro as Italy’s economy shows signs of recovery.
The Pound Euro exchange rate will remain driven by political developments for the rest of the week, and with the Conservative leadership race now in full swing with Boris Johnson launching his campaign just yesterday, Sterling could rise on no-deal Brexit fears.