Pound Euro (GBP/EUR) Exchange Rate Plummets on No-Deal Caution
The Pound Euro (GBP/EUR) exchange rate tumbled by nearly half a cent upon publication of papers detailing the impact that a no-deal Brexit might have on the British economy.
The papers, published by the UK government, address the effect a no-deal split would have on UK consumers and businesses, and despite Brexit Secretary Dominic Raab stating he hoped the plans would be ‘rendered redundant’ by an agreement being reached between the UK and EU, GBP investors seem to be disenchanted by the outline of what a no-deal would look like.
Pound (GBP) Exchange Rates Struggle amid No-Deal Fears
The Euro (EUR) is not the only currency the Pound (GBP) has dropped against this afternoon, with Sterling struggling against most major currencies other than the Australian Dollar (AUD) – which has weakened due to Australia’s current political instability – and the New Zealand Dollar (NZD), which has diminished due to risk-averse markets.
Euro (EUR) Exchange Rates Rise as Eurozone PMI Swings Up
Euro (EUR) exchange rates were bolstered today following Markit PMI’s for August, which indicated an optimistic forecast for Eurozone growth this month.
Both manufacturing and services look set for steady expansion, and Chris Williamson, Chief Business Economist for IHS Markit, stated that ‘the August survey sends a hawkish signal to policymakers.’
Further aiding the single currency were accounts from the ECB’s latest policy meeting, which hawkishly indicated that the Eurozone’s economy was performing as expected, likely lending confidence to EUR investors.
Pound Euro (GBP/EUR) Exchange Rate Forecast: Sterling to Struggle amid Brexit Turbulence?
Looking ahead, the Pound Euro (GBP/EUR) exchange rate may continue a downtrend tomorrow should focus remain on the no-deal plans released by the UK government today.
Brexit negotiations have entered the ‘final stage’, according to EU negotiator Michel Barnier, and so any news on the UK-EU front could tip the pairing for or against the base currency.
The Pound may find some respite tomorrow, however, as the UK releases domestic mortgage approvals for July.
Should these print high as forecast, Sterling may gain some much-needed momentum in markets.
The Euro may also struggle to gain ground tomorrow though, with an empty economic calendar and markets looking to the safe-haven of the US Dollar (USD) likely turning investors off the single currency.
With both currencies likely to fight an uphill battle tomorrow, the pairing could see some volatility throughout the session.
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TAGS: Euro Pound Forecasts