GBP/EUR & EUR/GBP Update + Brexit News - 25th/10th

Good morning everyone,

Brexit negotiations remain a key focus for the GBP/EUR exchange rate and yesterday Sterling was little changed against the Euro despite falling sharply against the US Dollar. Italian budgetary concerns look to be impacting on the Euro. The European Central Bank will announce its latest policy decision this afternoon 12:45, followed by ECB President Draghi’s regular press conference 1:30. No immediate change in Eurozone monetary policy is expected. Moreover, the ECB is likely to reaffirm its previous policy guidance that net asset purchases will conclude at year-end, and that interest rates are likely to start rising sometime late next year.

At its last meeting, the ECB revised down its growth forecasts (slightly), and noted that uncertainties relating to rising protectionism, emerging market vulnerabilities and financial market volatility have “gained more prominence recently”. Draghi seems unlikely to go much further this time despite mixed economic data but it will be particularly interesting to see whether he has any concerns about recent developments regarding the Italian Budget.

Brexit News (& Politics)

May survives another day thanks in no small part to the lack of a viable alternative candidate. “The mood of the meeting was get behind her and let’s support her to negotiate,” Said George Freeman, who once headed May’s policy board but has been critical of her plans since returning to the backbenches, told Bloomberg’s Rob Hutton. Another lawmaker, who asked not to be named, said that unity had broken out.

May could still be toppled but then again that’s been true for more than a year. Her Cabinet is divided, and there might not be a majority in Parliament for any deal at all, but it’s increasingly clear that the Brexiteers don’t have the numbers to oust her and there’s no consensus candidate waiting in the wings. One lawmaker was blunt about it last night "She’s surviving because there’s no viable alternative". Negotiations are on hold, and the European side isn’t expecting any movement until after the budget next week and the risk of rebel lawmakers upsetting the process has passed. The U.K. probably needs to come up with some more concessions and May will be hoping that last night’s support is enough to see her through the final stretch.

GBP/EUR & EUR/GBP Weekly Movements

After yesterday evenings news of PM May’s survival (yes its seems it came thanks to no alternative candidate) it’s now one less worry nonetheless but surprisingly there’s been little reaction in Sterling exchange rates. It seems this is down to the ECB meeting later this afternoon. Traders/investors don’t want to buy into Sterling just yet until we hear from the ECB later this afternoon. As mentioned above, the official decision will be made at 12:45 but it’s the following press conference that will be most watched for signs for future decisions or more likely what new concerns have come to light since the last meeting. Next weeks economic data will be closely watched along with the BoE’s rate decision, Inflation report and the BoE Governor will speak at a press conference.

With market sentiment for GBP/EUR rate still on a side way/downward trend at time of writing - Current key trading level is around the €1.13’s (If we see the rate move Lower than this level for a sustained amount of time, then the likelihood of the rate moving into the €1.12’s will be high). Traders are now taking a look ahead to this afternoons ECB meeting and after that to the latter part of next week’s economic data and BoE meeting for big movements in the GBP/EUR exchange rate. Of course, unexpected Brexit updates/comments can effect the GBP/EUR rate in the meantime.

Low Risk takers with pending exchanges until the end of next week (2nd of November) should consider making their exchange prior to this afternoons ECB meeting.

Medium & High Risk takers with pending exchanges until he end of next week (2nd November) should consider holding off making their exchange until (A) This afternoons ECB meeting and (B) until next Thursdays BoE meeting, Inflation report and BoE governor Carney speaks.  

GBP/EUR Daily Performance

  • High of the day so far is €1.1322
  • Low of the day so far is €1.1290
  • Resistance at €1.1380’s
  • Support at €1.1290’s
  • Trading Range €1.1230’s - €1.1380’s
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