Update: The Pound to Euro exchange rate broke below 1.13 in Thursday’s trading, reaching lows of 1.1281. The European Central Bank (ECB) opted to keep interest rates on hold on Thursday, and ECB Chief Mario Draghi took to the microphone for a press conference. Draghi said that he was ‘confident’ that Italy and the European Commission would come to an agreement over Italy’s budget. Draghi also commented on Brexit, saying:
‘If this lack of a solution continues, and approaches the end date, then the private sector itself will have to prepare on the assumption that it will be a hard Brexit. That’s where there will be financial uneasiness in markets.’
The Pound to Euro (GBP/EUR) exchange rate has been climbing this morning, reaching highs of 1.1322. Theresa May seems to have survived another day after addressing the 1922 committee last night. May called for unity after rumours that she may be facing an imminent leadership challenge.
Theresa May Fends Off Leadership Challenges, Pound (GBP) Exchange Rate Climbs
Some MPs seemed buoyant after the meeting, with Former Home Secretary Amber Rudd saying that May had ‘won the room’ to gain herself a ‘stronger position’.
‘She got a warm welcome, she talked quite emotionally about why she was doing this for the good of the country and how it was important that the public and our party members realise that we are behind her and that we all wanted the same thing – which is to lead in the best interests of the country… She was talking frankly and honestly from the heart about why she was doing this and why it mattered.’
Eurozone Economic Sentiment Slips Pulling the Euro (EUR) Exchange Rate Down
Yesterday had seen the Eurozone Composite Purchasing Managers’ Index (PMI) hit a two-year low. Economic confidence has slipped amid trade wars. Markit’s Chris Williamson said:
‘The slowdown is being led by a drop in exports, linked in turn by many survey respondents to trade wars and tariffs, which appears to have darkened the global economic environment and led to increased risk aversion.’
On the calendar today, the European Central Bank (ECB) will meet to make its latest interest rate decision, followed by a press conference with ECB Chief Mario Draghi which could be influential for the Euro exchange rate. Draghi will also speak in Brussels on Friday. It’s expected the ECB Chief will be given questions surrounding Italy and Brexit, and the Bank’s plans for monetary policy.
It’s a quiet end to the week for UK economic data, leaving politics as the Pound exchange rate’s main driver.
On another note, the recent global stock markets sell-off seems to be ramping up the pace today. Contributing towards the stock slide are concerns about global economic strength, trade wars between the US and China, more interest rate rises by the US Federal Reserve, and Jamal Khashoggi’s murder. Tech stocks on Wall Street had their worst performance in seven years yesterday.
Industry expert Greg McKenna said:
‘The fear is palpable in stock markets at the moment. This could get much worse before it gets better. Collapses happen after falls. That’s the danger.’
The Pound to Euro (GBP/EUR) exchange rate is trading in the region of 1.1318 around 0.15% higher.