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Euro to Pound Sterling (EUR/GBP) Exchange Rate Improves as UK-EU Brexit Negotiations Breakdown

August 21, 2019 - Written by John Cameron

The Euro to Pound exchange rate rose on Wednesday 21st August, with the pairing fluctuating around £0.914 handle.

Today saw Prime Minister Boris Johnson heads to Europe in an attempt to gain support to scrap the Irish backstop with German Chancellor Angela Merkel and French President Emmanuel Macron.

Ed Vaizey, Conservative MP and former minister, said that Mr Johnson was ‘just going through the motions’ with the EU, with no real intent to secure a Brexit deal.

Mr Vaizey commented:

‘We've been looking at the wrong target. The EU has said again and again and again this is the deal. They've got 27 countries to support it; we can't even get 350 MPs to support it.’

Phil Hogan, the European Commissioner for Agriculture, also added:

‘If the UK fails to prevent a crash-out Brexit they should be under no illusion regarding the foul atmosphere they will create with their EU partners and the serious consequences this will have for negotiating any future trade agreement.’

As a result, Sterling traders are remaining jittery today as Boris Johnson’s European visit is expected to cement the likelihood of a no-deal on October 31.

EUR/GBP Exchange Rate Edges Higher despite Italy’s Political Uncertainty

The Euro (EUR) edged higher against the Pound despite yesterday’s resignation of the Italian Prime Minister, Giuseppe Conte, who – under pressure from a possible no-confidence vote – declared Deputy Prime Minister Matteo Salvini, a prominent Eurosceptic, as the root cause of the coalition’s chaos.

Now that Italy’s Government has effectively collapsed, this has heightened the likelihood of Salvini’s League gaining a general majority if it teams up with the 5-Star Movement, which would increase Italy’s chances of leaving the European Union.

However, developments remain uncertain, with the other possibility that the League could become the opposition if the 5-Star Movement allies with the Democratic Party.

Brexit also remains in focus today, with the French Government announcing that it expects the UK to leave the EU without a deal in October.

Euro traders have become increasingly jittery as political uncertainties continue to wrack confidence in the bloc.

EUR/GBP Exchange Rate Outlook: German Manufacturing PMI in Focus

Euro traders are looking ahead to tomorrow’s preliminary German Markit Manufacturing PMI for August, which is expected to ease from 43.2 to 43. This could considerably weaken the Euro against the Pound as it would confirm fears of an imminent recession for the German economy in the third quarter.

Meanwhile, Pound investors will be awaiting tomorrow’s CBI Distributive Trades Survey for August, which is forecast at -11%.

The EUR/GBP exchange rate is likely to remain volatile this week as political uncertainties continue to weigh on market confidence in the European currency.

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