Pound Euro exchange rate stumbles amidst Brexit concerns

The Pound to Euro exchange rate trended lower this week, as Sterling sentiment was sapped by fresh Brexit jitters. 

GBP/EUR slips back to €1.18 as Brexit concerns overshadow upbeat UK data 

The Pound struggled to attract support this week, with the appeal of the currency being undermined by persistent Brexit uncertainty. 

This was partly brought about by comments from European Commission vice-president Maroš Šefčovič, in which he suggested talks regarding the Northern Ireland protocol will ‘probably’ drag into next year, despite the UK government softening its stance in recent weeks.   

In addition, a row between the UK and France over migrants crossing Channel, also cast a shadow over ongoing talks. 

These Brexit concerns largely overshadowed the release of some broadly positive UK economic data over the past week, with November’s preliminary PMIs and latest CBI distributive trades and industrial orders indexes all printing above forecast.  

The euro, meanwhile, got off to a slow start this week, as rising Covid cases in Europe stoked fears that more countries could join Austria in imposing new lockdowns measures. 

However, the single currency then bounced back to life on Tuesday with the publication of the Eurozone’s own PMIs after both the bloc’s manufacturing and services sectors reported a surprise expansion of growth this month. 

A lacklustre business morale reading from Germany as well as a strong US Dollar then saw the Euro relinquish some of this support in mid-week trade, before EUR exchange rates were able to rally at the end of the week, in spite of fears over the emergence of a worrying new Covid variant in South Africa. 

Eurozone inflation centre stage next week

Turning to next week’s session, it’s likely that the Eurozone’s latest consumer price index will be a key focus for markets. 

November’s preliminary CPI release is expected to report inflation in the bloc accelerated to 4.4%, reaching its highest levels since the early 90s. 

While the ECB has repeatedly affirmed its commitment to leaving its ultra-loose monetary policy in place to aid the Eurozone’s recovery, such a surge in inflationary pressure could fuel speculation the ECB might need to act a little earlier than it previously thought. 

Meanwhile, with the UK’s data calendar looking pretty sparse next week, its likely we could see the direction of the Pound primarily driven by Brexit headlines and BoE rate speculation. 

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.  

* This article has been written by a third party not owned or controlled by Spanish Property Insight (SPI).
SPI disclaims any responsibility or liability related to your access to or use of any third party content.