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Pound euro exchange rate: GBP holds up against EUR despite Brexit warning


The focus has shifted back to Brexit today, with the pound rising against the euro following yesterday’s positive UK employment data releases. Nevertheless, the pound suffered overnight following a statement yesterday afternoon from the European Commission Chief Spokesman, Margaritis Schinas. He had a dire warning for the UK if a no-deal Brexit were to happen, saying that it would lead to a hard border in Ireland. He said: “If you like to push me and speculate on what might happen in a no-deal scenario in Ireland, I think it’s pretty obvious, you will have a hard border.”

Prior to this, the pairing jumped following the release of November’s unemployment and wage figures.

The former dipped to a 40-year low of 4 per cent, and the number of people in work now sitting at a record high.

Yesterday also saw the release of Germany’s ZEW Economic Sentiment survey for January.

The figures unexpectedly increased to -15 from -17.5, showing that investors remain pessimistic, just less so.

Finding a silver lining to this cloud, ZEW President Achim Wambach said: “It is remarkable that the ZEW Economic Sentiment for Germany has not deteriorated further given the large number of global economic risks.”

With a lack of data from the eurozone this afternoon, it seems likely that the main catalyst for movement will be Brexit discussions, with any indication of an upswing in support for Theresa May’s ‘Plan B’ likely to cause movement in the pairing.

Tomorrow, the main focus for the euro is going to be the eurozone’s Markit manufacturing and services PMIs, which are forecast to either increase or keep steady, and if this is the case there could be increased support for the euro.

The European Central Bank’s (ECB) January interest rate decision is also due tomorrow.

No change in rates are expected, with interest rates likely to remain stuck at 0 per cent, where they have been since 2016.



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