Pound euro exchange rate: GBP stuck at one-month low on German economy update
15 May 2019 11:17
The euro is trading robustly this morning as markets welcome the release of Germany’s latest GDP figures. According to preliminary data published by Destatis, Germany’s economy expanded by 0.4 per cent throughout the first quarter of 2019, with growth recovering after stagnating at the end of 2018. This comes as a major relief to euro investors, many of whom had feared the Eurozone’s largest economy could have fallen into recession in the first half of 2019 after a string of gloomy data in recent months. Carsten Brzeski, Chief Economist at ING Germany said: “Today’s GDP data is balm for the soul of the German economy.
“It also confirms our long held view that not all is bad in the German economy.”However analysts warn that Germany should not take this growth for granted, and that more needs to be done to encourage investment in the country if it is to avoid a repeat of last year’s slowdown.Mr Brzeski, adds: “Just as weak GDP data in the second half of 2018 was not purely a result of wrong policies and business decisions or a sign that the German economic business model should be discarded, so today’s strong data is no reason for complacency.”At the same time, the pound is steady this morning as markets digest the news that Theresa May plans to hold another parliamentary vote on Brexit next month, regardless of whether the government and Labour have reached a deal.
The Prime Minister said the passing of the bill is “imperative” if the UK was to leave the EU before parliament breaks up for summer, suggesting the alternatives will be a no-deal Brexit or to revoke Article 50 altogether.However, with MPs having already rejected the Brexit bill three times, traders are unsurprisingly sceptical.Looking ahead to the second half of the week, we may see the pound euro exchange rate continue to struggle to find momentum as a lull in UK data leaves the focus firmly on Brexit, with the possible collapse of cross-party talks likely to weigh on sentiment.Meanwhile, EUR investors are likely to become increasingly nervous over the coming week as they brace for the upcoming EU elections amidst signs that Eurosceptic factions look likely to claim a greater number of seats this year.