Pound to euro exchange rate: Sterling struggles as it is ‘undermined by Sadiq Khan’
Sterling has not had a good week, and the exchange rate has been affected by both positive news in the Eurozone and negativity in the UK.
While recent manufacturing figures from the UK have been good, they have not been enough to boost British currency.
And movement may be limited today, with no new data expected which could affect figures.
Speaking to Express.co.uk, TorFX currency analyst Laura Parsons said: “The euro surged on Thursday as the minutes from the European Central Bank’s (ECB) last policy meeting proving surprisingly upbeat, and the GBP/EUR exchange rate closed out the European session down 0.5 per cent from the day’s opening levels.
“The minutes showed that policymakers are debating winding down the quantitative easing program, which fostered hopes that tighter monetary policy is on the way.”
Explaining what had hit sterling, she continued: “The pound, meanwhile, was undermined by London Mayor Sadiq Khan, who offered a fresh warning over the potential negative impact of a no-deal Brexit scenario.”
And there is not much expected to change today, as Laura explained: ““With no major European data on the calendar today, GBP/EUR exchange rate movement may be limited unless any fresh Brexit developments materialise. Investors will also be looking ahead to next week’s UK inflation data.”
This rounds off a difficult week for sterling, which has not performed well against the euro despite positive manufacturing news.
The main issue for sterling has been the UK’s trade deficit widening, and Laura explained what this means for the pound.
She said: “The GBP/EUR exchange rate dropped on Wednesday as the UK’s trade deficit widened.
“Other British data (including manufacturing/industrial production and construction output stats) printed strongly but weren’t enough to lift Sterling.”
An upbeat set of minutes from the European Central Bank’s (ECB) December monetary policy meeting pushed the euro up yesterday.
The minutes stated; “The view was widely shared among members that the Governing Council’s communication would need to evolve gradually, without a change in sequencing, if the economy continued to expand and inflation converged further toward the Governing Council’s aim.”
The Eurozone has recently enjoyed solid economic data, such as yesterday morning’s 2017 German GDP figure, which revealed that growth has accelerated to a six-year high of 2.2 per cent – or 2.5 per cent on a working day adjusted basis.
Inflation has remained muted, with the European Central Bank forecasting that price growth will only reach 1.7 per cent by 2020 – almost 30 basis points below its target level.