- Little progress expected from Brexit talks which conclude today
- Pound (GBP) as consumer confidence beats forecast
- Euro (EUR) ease after ECB inspired rally on Thursday
- At 06:15 UTC, GBP/EUR is trading +0.05% at €1.1116
The Euro is pausing for breath after soaring against the Pound in the previous session. The Pound Euro exchange rate settled -0.72% lower at €1.1113 after the European Central exceeded stimulus expectations in the latest monetary policy meeting
At 06:15 UTC, GBP/EUR is trading +0.05% at €1.1116 amid Brexit nerves, dismal UK consumer confidence data and as investors look ahead to German factory order data.
The Pound was under pressure on Thursday as the latest round of Brexit talks appear to have made little progress so far this week. Following days of talks, the two sides remain far apart on key topics. Today, EU negotiator Michel Barnier will give his update on the talks, stalemate is expected. As a result, pressure has increased on political leaders to find a way forward when they meet later this month.
Consumer confidence in late May fell to its lowest level since the financial crisis over 10 years ago as households worried about a rise in unemployment and falling house prices, a survey by GFK revealed. The confidence index slipped to -36 in the second half of last month, down from -34, but also better than the -40 forecast. The slightly better than forecast reading is helping to underpin the Pound in early trade.
The Euro surged higher across the board on Thursday after ECB President Christine Lagarde announced a bigger than anticipated expansion to the central bank’s emergency bond buying programme. The Pandemic Emergency Purchase Programme, which aims to support those EU worst affected by the coronavirus crisis was expanded by an additional €600 billion, whilst the time horizon was also extended to June 2021, from this October.
Whilst monetary stimulus would usually drag on demand for a currency, these are not usual times. The Euro soared on the knowledge that the ECB was willing to offer deep support to the common currency.
ECB President Christine Lagarde acknowledged that the downturn appears to have bottomed out. However, she also pointed out that any upturn had been “tepid”.
Today investors will switch their attention back towards the economic calendar with Germany factory orders. Analysis are expecting German factory orders to -19.7% in April, a downward revision from -15.6%. Broadly speaking the Euro has been able to shrug off dire data.
