Pound Euro (GBP/EUR) Exchange Rate Flat as PM Resigns amidst Brexit Uncertainty

May 24, 2019 - Written by John Cameron

STORY LINK Pound Euro (GBP/EUR) Exchange Rate Flat as PM Resigns amidst Brexit Uncertainty

GBP/EUR Exchange Rate Rangebound as European Election Worries Rise

The Pound Euro (GBP/EUR) exchange rate steadied today and is currently trading around €1.1318 on the interbank market.

The Euro (EUR) fell against the Pound (GBP) on increasing concerns surrounding the European Elections, with a number of Eurosceptic parties, along with the Italian Deputy Prime Minister, Matteo Salvini, proving problematic for the EU’s political integrity.

The UK’s ongoing Brexit uncertainty is also weighing on sentiment in the single currency, with the Brexit Party – a party critical of the EU – gaining favour as the two major British parties face diminishing status in the polls.

Jean-Claude Juncker, the President of the European Commission, commented:

‘If you tell people for 40 or 45 years 'we're in it, but not really in it', we're part-time Europeans and we don't like these full-time Europeans, then you should not be surprised if people follow simple slogans once they're asked to vote in a referendum.’

The Pound, meanwhile, was left steady following Prime Minister Theresa May’s announcement of her resignation on the 7 June.

However, this has left many Sterling traders feeling uncertain over Brexit, and with growing fears of a no-deal – or Brexiteer Conservative leader – continuing to dampen UK market sentiment.

GBB/EUR Exchange Rates Steadies as UK Retail Sales Figures Ease

Today saw the publication of the UK retail sales figures for April, which eased to 0.0% - exceeding the forecast decrease of -0.3%.

The annual retail sales for April, meanwhile, increased above consensus to 5.2%, although slipping against March’s 6.7%.

Samuel Tombs, the Chief UK Economist at Pantheon Macroeconomics, commented:

‘April's retail sales figures are a timely reminder that political uncertainty is having no discernible impact on households' overall spending. The stability of volumes in April is a good result, following recent strong gain.’

However, with Brexit concerns rising, and the UK’s leadership now essentially open for a couple of weeks, many Sterling traders have been focusing on political developments instead.

GBB/EUR Outlook: Brexit Leadership in Spotlight

Monday will see UK banks closed for the Spring Bank Holiday.

Pound traders will instead be looking ahead to Tuesday, which will see the UK inflation report hearings, and with any dovish comments about the economy, this could weigh on the GBP/EUR exchange rate.

Euro investors, meanwhile, will be awaiting the German GFK Consumer Confidence Survey for Jun, which is expected to hold steady at 10.4.

The Pound Euro exchange rate will be determined by unfolding political developments into next week, and with Brexit uncertainty likely to rise on a lack of a clear leadership into the future – and with no manifest consensus emerging in Parliament – this is likely to drag down Sterling.

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TAGS: Euro Pound Forecasts Pound Euro Forecasts