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Pound euro exchange rate: GBP edges lower against EUR to region of €1.112


Sterling has been struggling against the euro this week due to limited economic news and growing concerns about what today’s Brexit contingency plans will reveal.

25 of approximately 80 no-deal Brexit impact papers are expected to be released today and the exact nature of the backup plans could have a significant impact on GBP demand.

Economists and traders alike are particularly interested to see what the government has planned for UK financial services in the event of a bad Brexit deal.

The euro has had a better start to daily trading, with two of three Eurozone PMI readings showing growth in August.

These were the services measure and the overall composite index.

August’s manufacturing PMI has been an exception, showing a larger-than-expected slowdown.

Viewing the composite PMI result as a sign of better results in the future was Markit Chief Business Economist Chris Williamson.

He said: “The survey data indicates that the Eurozone economy looks to have continued to grow at a steady rate in August, raising hopes that the third quarter could see GDP growth match the 0.4 per cent expansion seen in the second quarter. In fact, the survey evidence suggests that the official data so far this year could yet be revised slightly higher.”

There is a risk of pound to euro exchange rate volatility when the Brexit impact papers come out today and unfortunately for GBP traders, the pound could slide if the proposed provisions are deemed to be inadequate.

Additional pound euro movement is also likely to be caused by the European Central Bank’s (ECB) meeting minutes and the currency bloc’s consumer confidence estimate.

If the ECB minutes indicated that policymakers are largely positive about the Eurozone’s economic outlook – meaning rates could rise in 2019 – the euro could gain.

However, euro gains may be limited as the later consumer confidence reading is expected to shift from -0.6 points to -0.7.



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