The Euro interbank rate fell to its lowest point in 22 months against the Pound during yesterday’s trading, after the news that the UK Parliament had voted against the possibility of a No Deal Brexit on Wednesday evening, removing some of the uncertainty and giving the Pound another boost. Voting took place once again last night and a motion to extend Article 50 won by a clear majority, however this did little to weaken GBP/EUR exchange rates following this vote.

Currency Pair% Change in 1 monthDifference on £200,000
GBPEUR3.9%€8,925
Germany narrowly misses a recession

Although much of this can be put down to sterling strength and renewed confidence that the UK will not be leaving the EU without a deal, the European economy is facing many difficulties of its own which is another factor helping to keep the euro’s value low. It was announced yesterday that Germany has narrowly avoided a recession during the last quarter of 2018, posting growth figures of 0%, following a 0.2% contraction recorded in the previous quarter. An economy is classed as falling into a recession when two consecutive months of contraction is noted.

The reasons for Germany’s economic slowdown in growth have been put down to a general slowing of the global economy, and a far weaker car manufacturing sector. This is due to consumers refraining from purchasing new cars because of confusion surrounding new emissions standards. Consumer spending has also remained lacklustre along with business investment into the country.

The concern is that early signs for 2019 are not looking particularly positive either, and a rebound in growth isn’t expected any time soon. Trade tariffs threatened by the US on European car exports could have dire consequences to not only the German economy, but the European economy and the value of the euro. Italy technically fell into a recession at the end of last year, so with the 2 largest economies in Europe noticeably struggling, this could continue to adversely affect the euro unless positive signs are seen in the near future.  

Will European Inflation figures help to strengthen the euro?

This morning may provide an opportunity for the euro to regain some of its losses, as Inflation figures (also known as Consumer Price Index) will be released for February at 10am. The expectation is for an improvement of 0.3% in February compared to the -1% posted in January, which could cause the euro to strengthen across the board, especially if the figure shows a larger improvement than expected. Clients with euro exposure could benefit from getting in touch with their Account Manager here ahead of this release.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.