Home Forex News German Factory Contraction Helps Pound Sterling to Euro Exchange Rate Holds its Ground

German Factory Contraction Helps Pound Sterling to Euro Exchange Rate Holds its Ground

by FxFinanceStockNews


Pound to Euro Exchange Rate Still Trending below Last Week’s Levels

Despite poor Eurozone data today, the Pound Sterling to Euro (GBP/EUR) exchange rate has been unable to keep climbing. Brexit uncertainties continue to limit market demand for the Pound (GBP), keeping the currency from benefitting more from this week’s UK data.

Since opening this week at the level of 1.1902, GBP/EUR has been trending much lower.

GBP/EUR briefly touched on a fortnight low of 1.1713 on Tuesday, but even after recovering has only been able to climb to around the level of 1.1800. This leaves it half a cent weaker than last week’s opening levels of 1.1856.

The Pound has seemingly run out of drive for now, and will remain driven by potential Brexit developments until next week’s key UK growth data. Meanwhile, Euro (EUR) investors await tomorrow’s German data.

Pound (GBP) Exchange Rates Steady as UK Data Fail to Keep Sterling Rallying

At beginning of the week, the Pound was throttled lower by fresh speculation that Britain could split from the EU with no deal at the end of 2020’s Brexit transition period.

Tough stances from UK and EU negotiators meant fresh hard Brexit fears, which remain a significant downside risk in the Pound outlook.

Uncertainties over how Brexit will unfold this year have kept a lid on the Pound’s strength this week, even as the currency found support in UK data.

Britain’s January PMIs were even better than projected, with the key services PMI seeing a surprise rebound from a stagnant 50.0 to 53.9 yesterday.

Analysts noted that Sterling would likely remain weak even amid the strong data though. As a result of this and resilience in rival currencies, the Pound was fairly flat this morning.

Euro (EUR) Exchange Rates Holding Ground despite German Factory Contraction

The Euro continues to be driven by market sentiment more than Eurozone data today, as it is holding its ground against the Pound despite a lack of domestic support.

This morning’s German factory orders results showed a surprising contraction of -2.1% for December. It was due to a drop in demand from other Eurozone nations.

Some analysts perceived it to mean that Germany’s economy still had room to worsen further.

However, analysts do generally predict that the economy will gradually recover momentum going forward. According to Bloomberg’s Jamie Rush:

‘We suspect the economy has reached its low point and expect momentum to gather pace gradually in 2020. Still, there’s no evidence of a significant recovery’

The Euro remained fairly resilient against Sterling and other rivals today despite these poor stats.

Pound to Euro (GBP/EUR) Exchange Rate Awaits Further Data

Both the Pound and Euro have cooled somewhat, following the highly volatile and jittery movement seen for much of the past week.

With no major UK data due until next week, Pound to Euro exchange rate investors will be awaiting potential Brexit developments as well as tomorrow’s German data.

If there is no unexpected Brexit news in the coming sessions, the Pound could continue to steady as investors await major data instead. This will leave tomorrow’s German trade and production stats as the data most likely to influence GBP/EUR.

If German trade and production data disappoints investors, it could worsen concerns that the German economic slowdown is still showing few real signs of recovery.

With Eurozone data not showing any solid signs of a strong economic rebound just yet, the Euro is expected to keep reacting to movements in rivals and be used as a funding currency.

On the other hand, if German and Eurozone data show more signs of recovery, the Pound to Euro (GBP/EUR) exchange rate could come under fresh pressure.





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