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GBP to EUR Exchange Rate Fails to Hold Best Levels as Brexit Uncertainties Flare Up

April 2, 2019 - Written by David Woodsmith

Due to a set of underwhelming Eurozone ecostats, the British Pound to Euro (GBP/EUR) exchange rate put in solid gains for most of yesterday’s session. Since then though, fresh uncertainties over how Brexit will unfold has meant that the Pound has been unable to hold its gains, though the Euro’s lack of appeal has meant GBP/EUR losses are limited too.

After opening last week at the level of 1.1670, GBP/EUR briefly surged higher due to mixed Eurozone data and Brexit hopes, touching a fresh yearly high of 1.1782 in the middle of the week. GBP/EUR tumbled when fresh Brexit complications emerged though, and the pair closed the week at the level of 1.1625.

A brief dip on Eurozone hopes was short-lived on Monday, as the latest Eurozone data continue to disappoint. GBP/EUR briefly jumped around a cent higher, but due to a lack of progress in Brexit the pair slipped and trended closer to the level of 1.1659 at the time of writing today.

GBP Exchange Rates Fail to Capitalise on Euro Weakness amid Brexit Jitters

The Pound saw a jump in demand yesterday, amid speculation that UK Parliament could push the Brexit process in a softer direction and that the government would be pressured to support it.

A perceived jump in support for the idea of Britain remaining in a customs union after Brexit made investors more optimistic about a soft Brexit, and this sent the Pound climbing throughout Monday’s European session.

However, in the evening the second round of ‘indicative votes’ in Parliament once again ended with every proposed amendment being rejected.

It followed a similar story last week, as well as last week’s news that Prime Minister Theresa May could resign during the next phase of the Brexit process. These developments were the primary reason GBP/EUR fell last week.

Yesterday’s developments were merely the latest sign that Parliament cannot decide on a path for the Brexit process, and as a result no-deal Brexit fears persisted.

However, despite this the Pound was able to avoid falling further versus a weak Euro. This was because despite the uncertainty, there is confidence that the EU will allow the UK a longer delay over Brexit.

The UK government also continues to indicate that it would prefer a no-deal outcome, despite the current formal Brexit date being less than two weeks away.

Some of the amendments for a softer Brexit came close to succeeding last night, so there is still hope that the Brexit process could be made softer.

EUR Exchange Rates Remains Unappealing amid Gloomy Eurozone Data

Following slews of mixed Eurozone data over the past few weeks and lasting concerns that the Eurozone economic slowdown is lasting longer than previously expected, this week’s Eurozone data has done the opposite of making the Euro more appealing.

Monday saw the publication of the Eurozone’s final March manufacturing PMI stats, as well as the bloc’s latest inflation rate report.

As Eurozone manufacturing was even worse than the already bearish projections indicated, the data made investors even more anxious about economic activity in the Eurozone.

The Eurozone’s inflation rate unexpectedly slowed too, dampening any remaining hopes of the European Central Bank (ECB) hiking interest rates over the next year and even causing speculation that the ECB could become more dovish.

Today’s Eurozone PPI data is low-influence, but as this data fell short of expectations too it didn’t offer any support to the limp Euro.

GBP/EUR Exchange Rate Forecast: Eurozone Data in Focus as Investors Await Brexit Developments

For now, the Pound to Euro exchange rate’s movement is steady as investors await the next major Brexit news, or Eurozone data.

There is speculation that another round of indicative votes could take place, but there are also rumours that the idea will be scrapped and Parliament will shift focus towards preventing a no-deal Brexit.

Either way, developments on how Brexit will proceed, with just a week until the formal Brexit date, will dominate Pound movement while Euro investors anticipate tomorrow’s next slew of Eurozone data.

Wednesday’s Eurozone data includes Markit’s final March services and composite PMI stats, which will give investors a better idea of how the Eurozone performed overall last month despite weak manufacturing performance.

February’s Eurozone retail sales results will be published tomorrow as well and are also likely to influence the Pound to Euro exchange rate.
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