Pound euro exchange rate: GBP flat as massive German factory orders slump

Data released on Thursday revealed that German factory orders slumped once again, with the shock fall in orders reinforcing that Europe’s largest economy is struggling. German factory orders slumped by a huge 4.2 per cent in February, and year-on-year orders dropped by 8.4 per cent.  This was the worst monthly fall in two years, dampening sentiment in the single currency. Commenting on the data release, Carsten Brzeski of Dutch bank ING, said: “Today’s sharp drop in new orders clearly undermines [the] latest tentative signs of a rebound in global activity in the first quarter of 2019.

Maybe February was simply too early to feel the rebound. This is the positive reading.

The negative reading is that the German industry should prepare for more bad news.”

Meanwhile, on Wednesday evening the House of Commons voted by a majority of one to force the Prime Minister to request an extension to the Brexit process. 

This likely buoyed Sterling slightly as the move was an attempt to avoid a no-deal Brexit.

The draft legislation from former Labour Minister Yvette Cooper would force Theresa May to ask the EU for an extension beyond 12 April, and gives Parliament the power to decide the length of the extension. 

Following the vote, the government stated the bill would place a ‘severe constraint’ on its ability to negotiate an extension to Article 50 with the EU.

However, the Bill still requires backing from the House of Lords and Royal assent for it to become law.

An extension would also need the unanimous support of the EU national governments. 

In an attempt to end the Brexit deadlock in Parliament, talks between Theresa May and Labour leader Jeremy Corbyn are set to continue today.

If there are signs that the cross-party talks are making progress, it is likely that the pound could rise against the euro. 

Looking ahead to Friday, the euro could slide against Sterling following the release of Germany’s industrial production stats.

If February’s industrial production follows the trend of weaker-than-expected data it would provide further indication that activity in the German economy is continuing to slump, which may cause the single currency to fall back. 

source: express.co.uk