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GBP/EUR Remains Pressured by Brexit Speculation

Yesterday’s high: €1.1008

Yesterday’s low: €1.1063

Euro Struggles to Gain Ground After German Export Contraction

Brexit-based worries continued to weigh on the GBP/EUR exchange rate throughout Tuesday’s trading session.

As Downing Street was quick to rubbish claims that it is prepared to pay a 40 billion Euro divorce bill the mood towards the Pound soured significantly.

Reports that Theresa May is planning to toughen her stance on Brexit did little to improve the appeal of Sterling, increasing fears that the UK faces an acrimonious divorce in 2019.

However, the Euro struggled to particularly capitalise on the ongoing weakness of the Pound.

While the German trade surplus was found to have widened from 22 billion to 22.3 billion in June, the underlying details of the data were not entirely positive.

With exports unexpectedly contracting -2.8% on the month, fresh questions were raised over the health of the Eurozone’s powerhouse economy.

This disappointing showing prompted the Euro to trend lower against many of the majors, with investors wary of the prospect of a slowdown in German growth.

A widening of the French trade deficit added to the bearish mood of the single currency, helping to prevent the GBP/EUR exchange rate suffering more substantial losses.

Euro Outlook: Improved Italian Production Could Boost Confidence

Fresh Eurozone data will be limited today, reducing the potential for the Euro to rally.

Even so, the single currency could find some manner of support on the back of June’s Italian industrial production figures.

Forecasts point towards a solid acceleration in output on the year, which would offer further evidence of improvement within the troubled Italian economy.

However, if production fails to pick up this may give investors further reason to sell out of the Euro.

The GBP/EUR exchange rate may struggle to gain any particular traction if Brexit concerns continue to dominate the minds of investors, though.

Even so, the latest raft of UK production and trade data could offer the Pound a rallying point on Thursday.

As markets expect to see a rebound in industrial activity after the weaker figures seen in May this could encourage a modest recovery for the GBP/EUR exchange rate.

Key Events

9th August

09:00 Italian Industrial Production

10th August

09:30 UK Industrial Production

09:30 UK Visible Trade Balance

 

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

Samuel Roberts

Currency Dealer

T: (0) 1442 892 077

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