Pound euro exchange rate: GBP rises as Carney defends gloomy outlook
Pound euro exchange rate: GBP is up around 0.3 per cent today (Image: GETTY)
A statement from the European Court of Justice (ECJ) has strengthened the position of Remainers hoping for a second referendum. The possibility of a second referendum provides an alternative to previously-forecasted scenarios of a chaotic ‘no-deal’ Brexit. Last week, Bank of England (BoE) chief Mark Carney stoked fears of an economic meltdown following a disorderly exit from the EU. Scottish MEP Alyn Smith, who was involved in the Article 50 legal action campaign, said: “We now have a roadmap out of the Brexit shambles, a bright light has switched on above an ‘exit’ sign and the false choice being offered to MPs at Westminster – that it is Mrs May’s disastrous deal or chaos – is shown for what it is, an abuse of Parliament.”
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Sterling was further bolstered by yesterday’s release of the UK’s manufacturing PMI for November, which showed a decent increase over last month.
Today saw the release of the UK construction PMI, which also showed a better-than-expected increase, buoying market confidence in Sterling.
Mark Carney also delivered a speech today in which he defended his gloomy forecasts.
He told lawmakers in Parliament: “You asked for something that we had, and we brought it, and we gave it to you.”
You asked for something that we had, and we brought it, and we gave it to you
Former BoE Governor Mervyn King however criticised Mr Carney.
He said: “It saddens me to see [the BoE] unnecessarily drawing into this project.”
The euro, meanwhile, has had investors holding their breath as Italy’s Prime Minister Giuseppe Conte has reportedly agreed to revise the controversial budget deficit, saying that his objective is to avoid Italy being penalised.
However, traders have remained generally cautious and are awaiting Conte’s new draft, with lingering fears that Italy will once again face disciplinary procedures.
The euro found some support from today’s release of the Eurozone producer price index (PPI) figures for October which showed an increase on September’s figure.
Tomorrow, however, will see the European Central Bank’s President Mario Draghi deliver a speech, with markets paying close attention to any comments he may make on the struggling Eurozone economy.
We will also see the release of the EU’s services PMI for November, which is expected to remain static – although GBP traders will be more interested in the UK services PMI, which is also due out tomorrow and also due to remain static.
The pound euro exchange rate is likely to remain driven by political developments in the coming days, with Theresa May rallying to secure support for her Brexit withdrawal agreement ahead of the 11 December vote.
The euro could take a hit if Conte’s budget review does not meet the expectations of the EC, with markets steering clear of the single currency if there are any more signs of penalties being levied on Rome.