Pound Sterling to Euro Exchange Rate Seeing Brexit Pressure but Jobs Surprise Markets

Pound to Euro Exchange Rate Pushed Back as No-Deal Brexit Fears See No Relief

Yesterday saw Sterling (GBP) attempt to recover from its worst levels, but the Pound Sterling to Euro (GBP/EUR) exchange rate’s gains were limited. With fears of a UK-EU Brexit talks collapse persisting, the Pound is still under significant pressure.

GBP/EUR attempted to rebound from its cheapest levels yesterday. However, GBP/EUR has fallen back again today. GBP/EUR opened the week at the level of 1.0802 and currently trends only a little higher in the region of 1.0822.

Compared to last week’s plummet of over four cents from 1.1217, Pound’s recovery attempts have been weak.

The UK government continues its attempts to undermine the Brexit withdrawal agreement. Pound investors are also likely awaiting Thursday’s Bank of England (BoE) policy decision.

Pound (GBP) Exchange Rates Fail to Mount Recovery despite Stronger than Forecast Jobs

The UK government won its first Parliament vote on pushing through its controversial changes to the Brexit withdrawal agreement yesterday.

With little sign that the government will soften its position, no-deal Brexit fears persist. This means the Pound has been unable to recover much of the huge losses it saw last week.

This is despite today’s UK job market report beating forecasts. There were less new jobless claims than expected, and less jobs lost than forecast.

However, analysts once again warned that the data was concealing the full impact of the coronavirus pandemic on Britain’s jobs.

Euro (EUR) Exchange Rates Remain Steady amid Eurozone Optimism

Investors have had little reason to move much on the Euro (EUR) lately. The Euro has seen resilient strength on hopes that the Eurozone is weathering the coronavirus pandemic better than other major economies.

These hopes persist. On top of this, the European Central Bank (ECB) has indicated it will not target the Euro’s levels despite the potential impact the currency could have on the Eurozone economy.

ECB Executive Board Member Fabio Panetta said today that the bank would continue to assess exchange rates just as it would other incoming information. He said:

‘The ECB’s governing council stands ready to adjust all of its policies, depending on incoming data, in order to bring inflation in line with its medium-term aim.’

Overall though, analysts have been given little reason to sell the Euro. This is keeping the currency appealing.

Pound to Euro (GBP/EUR) Exchange Rate Awaits Brexit and Bank of England (BoE) News

The Pound still remains heavily pressured by fears that the UK government’s actions on the Brexit withdrawal agreement could cause a no-deal Brexit.

Markets will continue to closely watch domestic Brexit developments, as well as how relations with the EU unfold. If UK-EU relations worsen further, the Pound is unlikely to see much relief.

GBP/EUR investors will also be watching upcoming data, due in the coming sessions. UK inflation rate data will be published tomorrow, as will Eurozone trade balance data. Eurozone inflation data will follow on Thursday.

However, Thursday’s biggest event will be the Bank of England (BoE) policy decision.

The BoE is not expected to make any changes to monetary policy. However, reaction to the latest Brexit and coronavirus developments could mean fresh signals for monetary policy.

For example, if the bank signals that negative interest rates are becoming more likely, the Pound to Euro (GBP/EUR) exchange rate has potential to fall even lower.