New lows for GBP/EUR exchange rate

The pound continued to trend lower on Friday, with the currency driven lower on lingering Brexit uncertainty and new divisions within the Conservative party.

As UK markets reopen following the Bank Holiday weekend, GBP/EUR is trading in the region of €1.1035, GBP/CAD is holding at C$1.6715 and GBP/USD has advanced to $1.2901. Meanwhile, GBP/AUD and GBP/NZD are lingering in the region of AU$1.7622 and NZ$1.9296 respectively.

Looking ahead to today’s session, a fairly uneventful data calendar could see the relatively low-impact US wholesale inventory figures as the main market mover.

What’s been happening?                       
                               
The pound was left on the defensive at the end of last week’s session, trending lower against most of its peers as the currency continued to be hounded by fears that the UK could be headed towards a no-deal Brexit.

This wasn’t helped by infighting within the Tory party following the publication of a letter from Chancellor Philip Hammond in which he suggested that a no-deal Brexit could damage the UK economy to the tune of 7.7% of GDP over the next 15 years.

This led to accusations from Brexit hardliners that Hammond was launching another ‘dodgy Project Fear’.
The GBP/EUR exchange rate drifted to a new 11-month low, with the euro also supported by forecast-beating German business confidence data.

Meanwhile the GBP/USD exchange rate swung higher at the end of last week’s session, with the US dollar being softened by a larger-than-expected contraction in US durable goods orders in July as well as comments by Federal Reserve Chair Jerome Powell.

Speaking at the Fed’s Jackson Hole Symposium, Powell indicated that he supported a slow-and-steady approach to interest rate rises.

What’s coming up?

In the absence of any notable UK data over the next few days Brexit is likely to continue to be the main catalyst for pound movement.

This may see Sterling continue to slide against its peers, especially if Brexit negotiations appear to continue at a snail’s pace.

At the same time the euro also faces a lull in data today, possibility causing EUR investors to look towards the second half of the week and the release of Germany’s latest inflation figures.

Finally the US dollar may experience some movement this afternoon with an expected rise in US wholesale inventory figures potentially strengthening USD exchange rates.