Euro Pound Sterling (EUR/GBP) Exchange Rate Steadies as PM’s ‘New’ Brexit Deal is Delayed

May 23, 2019 - Written by John Cameron

STORY LINK Euro Pound Sterling (EUR/GBP) Exchange Rate Steadies as PM’s ‘New’ Brexit Deal is Delayed

EUR/GBP Exchange Rate Flat as UK Political Uncertainty Continues

The Euro Pound (EUR/GBP) exchange rate is steady today and is currently trading around £0.880 on the interbank market.

The Pound (GBP) stabilised against the Euro (EUR) despite ongoing Brexit uncertainty with Theresa May being increasingly challenged over her ‘new’ withdrawal bill, as many MPs continually call for her resignation.

This has weakened market confidence in Sterling, with increasing doubts setting in over whether or not May will be able to draw back parliamentary confidence in time for the possible June vote.

Mark Spencer, a Tory MP and Government whip, summarised the situation, saying:

‘At the moment, we have not secured agreement to this in the usual channels. Of course we will update the House when we return from recess [in June].’

Concerns are also rising over the integrity of the two major parties during the European elections, with the Brexit Party polling favourably against the Labour Party and the Conservatives.

EUR/GBP Exchange Rate Holds Steady on Weak Eurozone Data

The Euro, meanwhile, has weakened against many of its other competitors following weak economic data, with the flash German Markit Manufacturing PMI figures for May sinking further into contraction.

The preliminary German composite PMI figures, meanwhile, improved above the consensus of 52.0 to 52.4.

Phil Smith, a Principal Economist at IHS Markit, remained downbeat, saying:

‘It is manufacturers who remain the most downbeat about the outlook amid lingering global trade tensions, though the survey highlights that fears of a slowdown may have started to spread to services, where confidence is now at its joint-lowest since 2014.’

Today also saw the European Markit PMI composite figures for May, which increased but, however, missed the more optimistic forecast, with both manufacturing and services sinking and disappointing many single currency traders.

The European elections, however, have remained in focus for many EUR investors, and as the EU is increasingly challenged by Eurosceptic parties – such as the Brexit Party in the UK – this has left the currency unappealing to investors.

Euro Pound Outlook: European Elections and Brexit to Remain in Focus

Sterling traders will be looking ahead to the publication of the UK retail sales figures tomorrow, and with the expected decrease, this may weigh on the GBP/EUR exchange rate.

Euro traders will be focusing on the European elections into the coming week, and with any signs of Eurosceptic parties gaining favourite throughout the continent, this could weigh on market confidence in the single currency.

The EUR/GBP exchange rate will be driven by political developments into next week, with the European elections due to continue, and heated debates over Theresa May’s withdrawal bill likely to continue until a consensus is drawn up for parliamentary favour.

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