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Pound Euro (GBP/EUR) Exchange Rate Struggles as BoE Raises ?No-Deal? Brexit Alarm

November 29, 2018 - Written by John Cameron

GBP/EUR Exchange Rate Down after BoE’s ‘Project Hysteria’ Forecast

The Pound Euro (GBP/EUR) exchange rate is down today after the Bank of England (BoE) predicted a dire Sterling drop of up to 25% if the UK faced a ‘no-deal’ Brexit scenario.

The Governor of the Bank of England, Mark Carney raised the alarm, saying:

‘[W]e know from our contacts with business, others know from their contracts, that less than half the businesses in the country have initiated their contingency plans for a no-deal Brexit.’

Conservative MP Jacob Rees-Mogg criticised Carney’s gloomy remarks, calling the bank’s outlook ‘project hysteria’ saying that 87% of British companies did not trade with the European Union.

The Euro (EUR), meanwhile, has been recovering from Germany’s poor Gfk consumer confidence figures for December, which showed a figure of 10.4 – a decrease of -0.2 on November – dampening demand for the single currency.

Pound Euro (GBP/EUR) Drops as MP Criticises ‘Botched Brexit’

The Pound (GBP) found some relief today from the BoE’s release of October’s mortgage approvals, with new figures showing 67.086K against September’s 65.726K – a difference of 1.36K.

However continuing Brexit concerns nipped any positive sentiment, with former Transport Minister Jo Johnson due to deliver a speech in which he is set to say:

‘The Conservative Party's reputation for economic competence would be undermined by implementing a botched Brexit, especially one that the Government's own analysis suggests will cause economic harm.’

Euro (EUR) Rises against Sterling as EU Business Climate Improves

The Euro (EUR) found strength today in November’s business climate survey, which showed 1.09 – a 0.08 increase on last month’s 1.01.

With the release of Germany’s CPI figures expected to take a downturn, EUR gains could be clipped.

Today’s financial stability review from the European Central Bank (ECB) will hold investors’ interest, with Italy’s on-going budget controversy set to unsettle the EUR/GBP exchange rate.

GBP/EUR Outlook: Brexit and EU’s Market Figures in Focus

The GBP/EUR exchange rate is set to remain sensitive to any news over Brexit, as Theresa May rallies to convince Parliament to pass her withdrawal deal.

The Pound (GBP) could face further downside pressure with tomorrow’s release of the UK’s November Gfk consumer confidence figures, which are expected to decrease.

Tomorrow will also see the release of the Eurozone’s CPI figures from Eurostat, which also shows an expected bearish result, potentially weakening the EUR/GBP exchange rate.

The EU’s October unemployment rate figures will also released, with an expected decrease likely.

Overall, the GBP/EUR exchange rate is expected to be dominated by political factors in the coming week, with any news of the Eurozone’s economy dipping lending support to Sterling.

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