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GBP/EUR Exchange Rate Struggles as Brexit Deadlock Persists

Last week’s high: €1.1754

Last week’s low: €1.1578

 

Lack of Brexit Progress Weighs Heavily on GBP/EUR Exchange Rate

It was another volatile week for the GBP/EUR exchange rate as Parliament failed to break its Brexit deadlock.

As MPs continued to reject any of the proposed alternatives to Theresa May’s already rejected plan the risk of a no-deal Brexit appeared to increase.

Coupled with a surprise contraction in March’s UK services PMI, which slumped from 51.3 to 48.9, this left the Pound on a weaker footing against its rivals.

However, as Theresa May requested a fresh extension until the end of June this encouraged a sense of optimism and helped shore up the GBP/EUR exchange rate ahead of the weekend.

The Euro came under pressure, meanwhile, as German factory orders plunged -8.4% on the year in February.

With confidence in the outlook of the Eurozone’s powerhouse economy faltering the single currency struggled to find much traction.

 

Euro Outlook: ECB Caution Likely to Limit EUR Exchange Rate Strength

Demand for the Euro could diminish further this week if the European Central Bank (ECB) maintains a cautious outlook at its latest policy meeting.

Signs that the central bank is willing to keep monetary policy looser for longer would leave EUR exchange rates vulnerable to fresh selling pressure.

However, if policymakers appear less comfortable with interest rates remaining at their current record lows for the foreseeable future this could offer the Euro a boost.

Any fresh evidence of a slowdown in the Eurozone economy, though, may see the single currency falter.

The GBP/EUR exchange rate is likely to remain under pressure as long as market uncertainty over Brexit persists.

Until there are signs of progress towards a mutually agreeable Brexit deal the Pound may struggle to find any particular degree of support.

 

Key Events

10th April

09:30   UK Industrial Production

09:30   UK Gross Domestic Product

12:45   European Central Bank Rate Decision

11th April

00:01   UK RICS House Price Balance

07:00   German Consumer Price Index

12th April

10:00   Eurozone Industrial Production

 

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To keep up to date with the Euro, visit the Euro blog in our Currency News section.

 

Alastair Archbold

Foreign Exchange Manager

aja@fcgworld.co.uk

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