Mixed Reception to Emergency Brexit Measures Leaves GBP/EUR Exchange Rate Close
The Pound (GBP) has progressively fallen against the Euro (EUR) over the course of the week but has halted its decline by holding close to opening levels today.
The GBP/EUR exchange rate has traded around €1.1097, following Thursday’s government release of 24 no-deal Brexit papers.
These impact papers reveal government plans for specific sectors of the UK economy in the event of a no-deal Brexit, and are in-effect contingency plans.
Pound Sterling made a clear loss against the Euro when the plans were first revealed, but subsequent cautious optimism from British companies has limited losses today.
In the aftermath of the impact paper reveal, British Chambers of Commerce Director General Adam Marshall said:
‘Ministers say they will take unilateral steps to keep trade moving freely but must demonstrate what they will concretely do to limit the impact of delays, inspections and red tape.
‘It is unfortunate that businesses face several weeks wait for further information and clarification.
‘Every additional delay means less time for businesses to prepare ahead of the UK’s fast-approaching exit from the EU.’
The call for clarity was echoed by organisations like UK Finance and EEF, but the rest of the government’s 80 impact papers aren’t due out until the end of September.
As such, today’s flat GBP/EUR movement is down to a balance of positive and negative responses to the government’s plan of action for a no-deal Brexit.
GBP/EUR Exchange Rate Held in Check by NFUS Warning on Brexit Impacts
While UK analysts and business bodies gave a mixed response to the government’s Brexit plans, the GBP/EUR exchange rate has still faced headwinds today.
This is because of the negative reactions to the Brexit papers – particular criticism has come from the National Farmers Union in Scotland (NFUS).
Andrew McCornick, NFUS President, has warned that:
‘Today’s announcement has not told farmers or crofters anything new and has only left us with the same questions as we had before.
‘The government need to start giving details of what life is going to be like on the other side of Brexit.
‘A “no deal” Brexit would mean the UK becoming a third country overnight, bringing in hard borders and the WTO default being imposed.
‘That runs completely contrary to our desire for trade to be as friction free as possible.’
Muted Reception to German GDP Data Leaves EUR/GBP Exchange Rate Steady
The Euro (EUR) has failed to capitalise against Pound (GBP) trader uncertainty today, continuing to trade in a narrow range in the pairing.
The latest Eurozone news has consisted of finalised German GDP figures for Q2 2018, which have shown quarter-on-quarter growth but an annual slowdown.
The respective shifts from 0.4% to 0.5% and from 2.1% to 2% matched up with forecasts, so there hasn’t been much Euro volatility on the news.
Pound Sterling to Euro Exchange Rate Forecast: Will GBP/EUR Slide on German Economic Optimism?
The Pound (GBP) is at risk of declining against the Euro (EUR) when next week begins, as Monday will bring positively-forecast German economic data.
IFO surveys are tipped to show rising economic sentiment across the board in August, with better perceptions of the business climate and future expectations.
If the IFO readings do show growing confidence among respondents then the Euro could make an early advance against the Pound on Monday.
