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Longer Brexit Delay Leaves Pound to Euro Weighed by Uncertainty

Last week’s high: €1.1637

Last week’s low: €1.1554

 

GBP/EUR Strength Limited as Brexit Delay Leaves Pound Outlook Cloudy

While demand for the Euro wasn’t particularly strong for most of last week, the Pound to Euro exchange rate still fell as the latest Brexit developments were unsurprising, but left the Pound with little in the way of fresh support.

Throughout the week, the Pound trended below its opening levels as investors became concerned that Britain’s economic outlook would remain dominated by uncertainties, due to the lack of a solid Brexit plan.

Investors were briefly relieved as the UK and EU agreed to delay the formal leaving date until the 31st of October. However, investors remained anxious about how Brexit uncertainties would dampen UK economic activity for most of the week.

Due to these uncertainties, the Euro found it a little easier to climb versus the Pound.

Demand for the Euro was supported by signs of recovering economic activity in the Eurozone, despite the European Central Bank’s (ECB) cautious tone on monetary policy.

Weaker demand for the Euro’s biggest rival, the US Dollar, also made it easier for the Euro to gain against Sterling throughout the week.

 

Euro Outlook: Brexit Takes a Backseat after Weeks of Chaos

Markets are likely to finally get a breather from the constant Brexit chaos over the coming week, as Parliament has risen for its Easter recess. This means that any major Brexit developments will be unlikely until MPs come back on the 23rd of April.

The Brexit issue is still far from solved though, with the government seemingly no closer to passing it through Parliament than it was at the beginning of the year. Uncertainty over how the process could unfold over the next half a year could continue to dampen UK economic activity, so investors will be carefully watching Britain’s upcoming data for signs of economic resilience.

If UK job data on Tuesday or inflation data on Wednesday impress investors, hopes for UK economic robustness could leave the Pound looking more appealing.

The Euro, on the other hand, is likely to be influenced by upcoming Eurozone data that directly influenced economic expectations or European Central Bank (ECB) monetary policy bets.

Of particular interest to Euro investors will be the Eurozone’s March inflation stats on Wednesday, and the bloc’s Markit PMI projections for this month on Thursday.

 

Key Events

16th April

09:30 UK Job Market Report

10:00 Eurozone Construction Output

10:00 German and Eurozone ZEW Economic Sentiment Index

17th April

09:30 UK Inflation Rate

10:00 Eurozone Inflation Rate

10:00 Eurozone Trade Balance

18th April

08:15 French PMI Projections

08:30 German PMI Projections

09:00 Eurozone PMI Projections

09:30 UK Retail Sales

 

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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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