The Pound to Euro exchange rate has edged higher this morning and broken through the 1.1450 level at its highest point of the day so far. The Pound to Euro rate has continued to climb despite poor data. This is due to hopes of a Brexit deal being agreed soon.
Pound to Euro exchange rate unaffected by poor UK Service data
I find the rise in the Pound to Euro exchange rate interesting and perhaps a sign of the Pound’s future price movements, as just yesterday there was a release of disappointing data out of the UK’s most important area of its economy. The services sector now covers around 80% of the UK economy so data released covering the health of the sector usually holds the potential to move the currency markets. Yesterday the October figure for Services PMI was released lower than expected. Sterling remained resilient and this morning its value has seen a boost from the levels it closed at yesterday.
The reason for the boost can be put down to renewed optimism surrounding a Brexit deal. Last week the Brexit Secretary, Dominic Raab suggested a deal could be in place by the 21st of November. There has also been talk of the previously cancelled November EU Summit being reinstated, which has also buoyed the Pound. Today British Prime Minister, Theresa May will hold a Cabinet meeting where Brexit will be in focus, especially the Northern Irish border and I expect this to continue to fuel rumours of Brexit progress.
Economic data that could affect Pound to Euro exchange rate
There are no major economic data releases out of the UK today, and there won’t be until the release of 3rd quarter GDP data on Friday. During this time Brexit news will most likely be the main driver but it’s also worth paying attention to the issues surrounding the Italian Budget and its Government’s disagreements with the EU regarding their Budget plans. At the moment the country is in a stalemate with the EU and if Italy doesn’t amend its plan it could be required to pay a fine of 0.2% of its GDP to the EU. Should this issue continue there is a chance of seeing the Euro weaken as Italy is a key constituent of the European Union. These issues would be coming at a bad time for the trading bloc as they already have the UK’s Brexit to content with.
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