Meanwhile, Sterling traders are increasingly jittery after Prime Minister Boris Johnson reportedly warned colleagues that a “significant amount of work” was still needed in order to secure a Brexit deal before the end of the month. President of the European Commission, Jean-Claude Juncker fuelled uncertainty with his own ambiguous comments: “it’s up to the Brits to decide if they will ask for an extension. But if Boris Johnson were to ask for extra time – which probably he won’t – I would consider it unhistoric to refuse such a request.”
Due to a lack of UK economic data today, the GBP/EUR exchange rate remains subdued on heightened uncertainty surrounding UK-EU Brexit discussions.
The Irish backstop lingers as a significant obstacle in Brexit discussions, with a failure to resolve the issue before Thursday’s EU summit likely to see Sterling tumble on fresh no-deal fears.
Meanwhile, the euro rose when August’s Eurozone industrial production improved unexpectedly to 0.4 percent.
Bert Colijn, a Senior Economist at ING, offered a downbeat assessment: “The outlook for the industry does not show much light at the end of the tunnel as September survey data suggest continued contraction at the end of [the third-quarter].”
“Production peaked almost two years ago, but spillovers to the service sector have remained limited for now.”
Today also saw September’s German wholesale price index ease by -0.4 percent, fuelling concerns that the Eurozone’s powerhouse economy is lurching toward a recession.
Brexit developments will continue to drive the GBP/EUR exchange rate for the rest of the week, with any sign of an emerging UK-EU Brexit deal likely to spark another buying frenzy in the pound.