November 9, 2017 - Written by Frank Davies
STORY LINK GBP EUR Exchange Rates Tumble on Fresh UK Government Scandals
The GBP EUR exchange rate tumbled today, with markets shifting to focus on the resignation of British Aid Minister Priti Patel on Wednesday night.
May Suffers Second Resignation in a Week, GBP Exchange Rates Tumble
UK Prime Minister Theresa May is now seeking to reassert her leadership following the second resignation from within her cabinet in a week.
Priti Patel was forced from office on Wednesday following various undisclosed meetings with Israel officials overseas.
These meetings were unsanctioned and thus breached diplomatic protocol.
Patel has since acknowledged that her actions were ‘below the high standards’ required of her positon, stating in her letter to May:
‘While my actions were meant with the best intentions, my actions also fell below the standards of transparency and openness that I have promoted and advocated’.
‘I offer a fulsome apology to you and to the government for what has happened and offer my resignation’.
At this point in time it is not clear who will be replacing Patel, and coming so shortly after the resignation of another member of May’s top team, Michael Fallon, the news acted quickly in underlining apparent weaknesses within May’s cabinet.
With today being another rather sparse data calendar day for the UK, the Pound has felt the full brunt of market attention, with investors increasingly worried that May’s questionable lead over her team could hurt Britain’s position in Brexit negotiations.
This prolonged the Pound’s descent against the Euro.
ECB Bulletin Proves Positive, EUR Exchange Rates Bolstered
According to the European Central Bank’s (ECB) recent economic bulletin, growth in the bloc is likely to continue unabated into the New Year.
The ECB optimistically stated:
‘Private consumption is underpinned by rising employment, which is also benefiting from past labour market reforms, and by increasing household wealth’.
‘The upswing in business investment continues to benefit from very favourable financing conditions and improvements in corporate profitability’, it added.
This news bolstered market confidence in the ECB’s monetary policy outlook, as the ECB had only just recently warned that further delays to the tapering of its quantitative easing scheme could occur if the economy struggled without support.
GBP EUR Forecast: Volatility Ahead on UK Data
Tomorrow will feature a run of data prints pertaining to the UK, with industrial production, manufacturing production, construction output, and the UK’s trade balance being the most significant.
On one hand, the UK’s trade deficit is forecast to shrink from -£5,626 to -£4,600 and the UK’s industrial production too, is expected to climb from 1.6% to 1.9%.
On the other, both construction output and manufacturing production are forecast to contract, with the former expected to print at 1.6%, down from the 3.5% previous, and the latter expected to fall from 2.8% to 2.4%.
If these figures do print as expected then the GBP EUR exchange rate may come under increased pressure, conversely, prints above expectations could give Sterling the room it needs to regain the lead.
Beyond the data, markets will be keeping a keen eye on any new Brexit-related information, with negotiations having officially resumed. If sufficient progress is demonstrated then market demand for the Pound will rise,
if none is achieved, however, then markets will become increasingly anxious, leaving the Pound by the wayside.
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TAGS: Currency Predictions Euro Pound Forecasts