The GBP/EUR exchange rate plummeted this week in response to a bullish speech from Boris Johnson in which he outlined his vision for a post-Brexit trade deal with the EU.
Pound Plunges as PM Strikes Hardline Stance on Trade Negotiations
The Pound got off to an extremely poor start this week, tumbling over a cent against the Euro on Monday in response to a speech by Boris Johnson.
As the UK made its first steps outside the EU, Johnson sought to strike a tough stance on future trade negotiations, calling for a Canada-Style free trade deal which wouldn’t require the UK to accept EU rules.
However it seems unlikely the EU would agree to such terms, stoking fears of a no-deal Brexit as the PM warned he would walk away from negotiations if such a deal was not on the table.
While Sterling made attempts to rally through the rest of the week on the back of some better-than-expected PMI figures, these gains proved limited in the face of ongoing Brexit uncertainty.
Meanwhile, after an initial jump courtesy of the collapse in the Pound, the Euro struggled to build on its momentum this week in light of some lacklustre data.
This included the Eurozone’s latest retail sales figures revealing sales growth in December contracted at its worse pace since 2008, as well as German industrial data painting a dire picture of its vital manufacturing sector at the end of 2019.
Stagnating UK GDP to Drag on Sterling?
Looking ahead to next week, movement in the Pound to Euro exchange rate in the first half of the session looks likely to be driven by the release of the UK’s latest GDP figures.
This could see Sterling test new lows as economists forecast it will reveal the UK economy stagnated in the last quarter of 2019 as a result of heightened political uncertainty.
GBP investors are also likely to keep an eye on potential Brexit developments, which may exert additional pressure on the Pound.
Meanwhile, the Euro could face some pressure next week as the Eurozone’s latest industrial production figures as expected to report a slowing of factory output in the bloc in December.
Also likely to influence the Euro next week will be German’s own GDP figures, with a lacklustre growth reading in the fourth quarter likely to weigh on EUR sentiment.
If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.
