The GBP/EUR exchange rate traded in a wide range this week as continued Brexit uncertainty left the Pound unable to find any solid footing.
Pound Fluctuates as Brexit Remains in Focus
The Pound initially got off to a strong start this week, after the UK’s latest GDP report saw first quarter growth revised slightly higher.
However, the the UK currency was unable to carry this momentum into the mid-week as rising anxiety over Brexit and a poor run of PMI figures took their toll on Sterling sentiment.
The Pound fared a little better in the latter half of the week, with GBP/EUR briefly jumping to a one-week high on Thursday as Boris Johnson’s stuck an optimistic tone as he presented his latest Brexit proposals to parliament.
This confidence may have misplaced however after EU officials said they were ‘unconvinced’ by Johnson’s offer, leaving Sterling subdued at the session came to a close.
Meanwhile the Euro also suffered some setbacks this week, initially slumping after German CPI figures revealed inflation in the country fell to an 18-month low in September.
Also limiting the upside in the single currency was the announcement that the US will impose $7.5bn worth of tariffs on EU exports, with EUR investors fearing what impact a US-EU trade dispute could have on the EU’s already anaemic economic growth.
Persistent Brexit Uncertainty to Keep Markets on Edge?
Looking ahead to next week, UK political and Brexit developments may continue to act as the main catalyst of movement in the GBP/EUR exchange rate.
Talks between the UK and EU are likely to intensify next week after the EU gave Boris Johnson until 11 October to offer fresh solutions to outstanding issues.
This may continue to drive volatility in GBP/EUR as the sparring between the two sides is sure to continue to create market moving headlines.
In terms of data, the Pound could face some headwinds next week with the publication of the UK’s latest GDP figures, with economists forecasting the UK economy will have stagnated in August.
In the spotlight for EUR investors next week may be the latest industrial data from Germany.
This could push the Euro lower if another disappointing round of data renews fears that Europe’s largest economy may slip into a recession this year.