GBP/EUR: Pound Tumbles vs. Euro As Brexit Project Fear Steps Up A Gear
  • Euro (EUR) barely reacted to German factory orders surging 4.5% MoM
  • German economic recovery expected to continue, albeit at a slower pace
  • US Dollar (USD) steady after sell-off on Monday
  • Trump returns to the White House & stimulus optimism remains

The Euro US Dollar (EUR/USD) exchange rate is trading flat in relatively subdued trading. The pair settled +0.5% at US$1.1781 on Monday, close to the high of the day at US$1.1798. At 08:15 UTC, EUR/USD trades just a few pips lower at $1.1778, towards the lower end of the daily traded range.

The Euro shrugged off impressive German factory orders. Data revealed that German factory orders rose for a fourth straight month in August, in the latest sign the the Eurozone’s largest economy is doing better than expected. Factory orders jumped 4.5% month on month, up from a 2.8% increase in July whilst smashing expectations of 2.6% increase. Export order provided a strong boost whilst domestic demand is also solid.

The data shows that the industry heavy economy is faring better than the service led economies, as its recovery gains momentum, whilst the recovery of service led economies are stalling. Tourism reliant southern European countries such as Spain and Italy are being hard hit.

The German Bundesbank expects Germany economic recovery to continue across the rest of the year, although at a slower pace.

There is no more high impacting Eurozone data due today. Investors will look ahead to a speech by ECB President Christine Lagarde for further clues on where monetary policy could be heading.

The US Dollar is subdued after experiencing a steep selloff in the previous session. The safe haven US Dollar was out of favour as the mood in the market improved on news that President Trump left the Walters Reed Medical Centre and is back in the White House. Trump intends to participate in the next Presidential debate on 15th October, narrowing some of the uncertainties surrounding these elections which had notched up when Trump fell ill.

Optimism surrounding US stimulus is also keeping the US Dollar on the back foot. House Speaker Nancy Pelosi and US Treasury Secretary Steve Mnuchin continue talks.