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Pound Euro Exchange Rate Slides on Brexit Fears

Last week’s high: €1.1363

Last week’s low: €1.1278

Brexit Warnings Drag GBP/EUR Exchange Rate Lower

Brexit returned to the forefront last week, helping to drive the GBP/EUR exchange rate sharply lower as market worries mounted.

Warnings from the CEOs of Jaguar Land Rover and Airbus dented sentiment, with both companies indicating they will have to scale down their UK operations in the event of a hard Brexit.

Comments from chief EU negotiator Michel Barnier spooked investors further as he warned that the two sides still had a long way to go before a final agreement.

The Euro also saw some marked volatility thanks to fears that the US will impose trade tariffs on EU car imports.

However, as the latest signs from the German economy pointed towards the recovery of some of its lost momentum the mood towards the single currency soon improved.

Disappointing US jobs data also helped to boost EUR exchange rates ahead of the weekend.

Euro Outlook: Resilient Eurozone Data to Support Single Currency

As long as the Eurozone continues to demonstrate signs of greater economic resilience the appeal of the Euro is likely to improve further.

Positive readings from the latest Sentix investor confidence and ZEW economic sentiment surveys could see EUR exchange rates making further gains.

However, if escalating trade tensions between the US and China spook markets this may see the single currency slump sharply as investors pile into safe-haven assets.

The NIESR gross domestic product estimate for the three months to June could also boost the GBP/EUR exchange rate.

Evidence that the UK economy bounced back from a disappointingly weak first quarter may drive the Pound higher, increasing the odds of an August interest rate hike from the Bank of England (BoE).

Key Events

9th July

09:30   Eurozone Sentix Investor Confidence Index

10th July

09:30   UK Trade Balance

10:00   German ZEW Economic Sentiment Survey

12:00   UK NIESR Gross Domestic Product Estimate

12th July

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.

 

Jack Wiles

Currency Trader

JSW@fcgworld.co.uk

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