Pound Euro (GBP/EUR) Exchange Rate Flat Ahead of BoE Monetary Policy Meeting

November 6, 2019 - Written by John Cameron

STORY LINK Pound Euro (GBP/EUR) Exchange Rate Flat Ahead of BoE Monetary Policy Meeting

Pound Sterling Euro (GBP/EUR) Exchange Rate Muted as PM Promises to Get Brexit ‘Over the Line’

The Pound Sterling Euro (GBP/EUR) exchange rate was left flat and the pairing is currently trading at around €1.1621.

Political uncertainty weighed on Sterling as Prime Minister Boris Johnson made a statement, marking the start of his election campaign.

Johnson said the Conservative Party would get Brexit ‘over the line’ if they win the general election on 12th December. He noted that if he remained in power he would end the ‘paralysis’ in parliament and leave the EU in January.

Meanwhile, the Pound remained under pressure as investors awaited the Bank of England’s (BoE) latest monetary policy meeting.

The bank has previously warned against further Brexit delays as the uncertainty was damaging the economy.

Added to this, the recent disappointing slew of UK data and weaker business confidence will likely mean the BoE’s next move will be a rate cut rather than a hike.

Euro (EUR) Left Flat as Manufacturing Gloom Weighs on Eurozone

Earlier this morning, data revealed that German factory orders picked up after months of contraction, suggesting this could be the turning point for the Eurozone’s largest economy.

However, the Euro was left under pressure after further date revealed the bloc’s economy continues to be hit by manufacturing gloom.

The Eurozone remained close to stagnation as Markit showed the Eurozone PMI composite edged up slightly from 50.1 in September to 50.6 in October.

While the data did show that service sector companies indicated growth last month, this was the second-weakest overall rate of expansion in six-and-a-half years.

The PMI composite did exceed the flash estimate of 50.2, but the single currency was left under pressure and commenting on this, Capital Economics’ Melanie Debono said:

‘Despite the upward revision, the index is consistent with the economy barely growing at the start of Q4. We expect growth to slow across the board.’

German Service Sector Subdued in October

The Euro was left flat against the Pound as further data revealed that growth in the German service sector remained subdued in October.

New work fell for the second month in a row and job creation slumped to a 17-month low which likely weighed on EUR.

While the Business Activity Index edged up from the previous month’s three-year low of 51.4 to 51.6 in October, this was still one of the weakest readings since the current services up-turn began in 2013.

Commenting on this morning’s data, Markit Principal Economist, Phil Smith said:

‘Germany’s service sector continues to grow, but only just and there are an increasing number of signs that the domestic economy is succumbing to the weakness in manufacturing. Lower demand was recorded by services firms for the second month in a row in October and, for the first time in almost seven years, expectations for future activity in the service sector have turned negative.

‘Based on these figures, the German economy looks set for another weak performance in the fourth quarter, with a further mild contraction in output not out of the question.’

Pound Euro Outlook: Will a Dovish BoE Governor Weigh on GBP?

Looking ahead to Thursday, the Euro (EUR) is likely to edge down against the Pound (GBP) following the release of data from the bloc’s largest economy.

If German industrial production falls further than forecast, the single currency is likely to be left under pressure.

Meanwhile, traders are likely to be focused on the Bank of England’s (BoE) monetary policy meeting tomorrow.

If the bank leaves rates unchanged but BoE Governor Mark Carney signals the bank is looking to ease monetary policy in the future, it is likely the Pound Euro (GBP/EUR) exchange rate will be left flat.

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TAGS: Pound Euro Forecasts