Pound Euro exchange rate: GBP/EUR muted as German economy fights back

This surprising turnaround in the trade figures meant the German trade surplus also widened to €19.4bn from €18.9bn in November. 

Meanwhile, British Prime Minister Theresa May will travel to Dublin for further discussions on the Irish backstop issue with Irish Taoiseach Leo Varadkar.

Yesterday afternoon saw the GBP/EUR pairing rise, as the Bank of England held interest rates steady at 0.75 percent, with Governor Mark Carney suggesting that in the case of a soft Brexit the economy will pick up and “we’ll move forwards.’

Dr Carney also stated: “The fundamentals of the UK economy are sound. The financial sector is resilient. Corporate balance sheets are strong, and the labour market is tight.”

Thursday saw the euro hit a two-week low as the European Commission cut its forecast sharply for Eurozone economic growth in the coming year, from 1.9 percent to 1.5 percent. 

In the absence of UK economic data, one of the main catalysts for the pound euro pairing is Brexit, as the Prime Minister continues to seek “alternative arrangements” for the Irish backstop.

This could cause pound sentiment to drop as the pairing did yesterday after there was no breakthrough in securing the legally binding changes Mrs May has requested.

February’s ZEW survey for economic sentiment is going to be released for Germany and the Eurozone on Monday, which is likely to cause movement of the pairing. 

If economic sentiment increases from the previous reading of -15 for Germany and -20.9 for the Eurozone, it could buoy the single currency. 

source: express.co.uk