Exchange Rates Today: British Pound Slumps Vs Euro, Dollar As UK Services Hits Record Low

In spite of limited confidence in the Euro, exchange rate investors continued to flock away from the Pound, with Brexit uncertainty dominating the outlook of both the GBP and the EUR.

Confidence in the sterling took another blow on Tuesday morning as the UK Services PMI returned to a thirty-eight month low of 52.3, suggesting that pressure is building on the domestic economy.

Investors were also prompted to move away from Sterling after the Bank of England (BoE) published its latest Financial Stability Report, despite the cutting of the counter-cyclical capital barrier on UK banks.

The Italian banking sector has become the focus in the latest pound to euro exchange rate forecasts.

As reported by the FT, "Eurozone officials have begun to worry that Italian banks may emerge as the weak link in their six-year effort to shore up the EU’s common currency."

"The turmoil unleashed by Britain’s vote to leave the EU has underscored those concerns by turning the spotlight back on the eurozone’s still-incomplete foundations."

Latest Euro Exchange Rates

At time of writing the pound to pound exchange rate is quoted at 1.

At time of writing the pound to us dollar exchange rate is quoted at 1.252.

FX markets see the pound vs japanese yen exchange rate converting at 194.694.

Please note: the FX rates above, updated 25th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.

The British pound vs euro exchange rate has managed a minor advance today, amid sterling's wider losses.

The latest movement in the exchange rate between the Pound and Euro has been positive, with Sterling edging up against the single currency.

One reason for this is waning confidence in the Euro, particularly due to the fact that Italy may be especially hard hit by the knock-on effects of the EU Referendum result.

Despite the latest Sentix Investor Confidence figure showing a particularly sharp decline from 9.9 to 1.7 this failed to particularly boost the GBP/EUR exchange rate.

Markets were discouraged by the UK’s June Construction PMI, which plunged into contraction territory ahead of the EU referendum, with continuing Brexit anxiety also weighing on demand for the Pound.

Demand for the British pound sterling (GBP) exchange rates continued to weaken ahead of the weekend, with investors discouraged by the suggestion that the Bank of England (BoE) is likely to cut interest rates imminently.

Markets did not react positively to the news the Chancellor of the Exchequer George Osborne had scrapped his target of reaching a budget surplus by 2020, even though this likely removes some downside pressure from the domestic economy.

While the general mood towards the single currency was not overly positive, thanks to fears of Brexit contagion, this nevertheless kept the Pound to Euro (GBP/EUR) exchange rate on a strong downtrend.

British Pound (GBP) Set to Remain Weak Against Euro (EUR) as Conservative Leadership Battle Starts

Although the Conservative leadership contest is now underway the political uncertainty gripping the UK is unlikely to abate any time soon, with the triggering of Article 50 looking to be a somewhat distant prospect.

If the Labour party remains caught up in its own stalemate power struggle then there is likely to be little cause for confidence in the outlook of the UK economy, and no clarity on what its future relationship with the EU will look like.

Tuesday’s BoE Financial Stability Report is not expected to offer a particular rallying point for the Pound either, as researchers at Westpac noted:

‘The Brexit crisis will hit confidence and activity in the UK and the BoE will act. As we move towards an extremely uncertain end Q3 and early Q4, we see further weakness in the pound.’

Euro (EUR) Exchange Rates on Weaker Footing on Speculation of Additional ECB Easing

Although recent Eurozone data has generally pointed towards a strong improvement within the domestic economy this has been overshadowed by the continuing fallout from the UK’s decision to leave the EU.

There is speculation that the European Central Bank (ECB) could be prompted to deploy further monetary loosening measures to pre-empt any negative spill-over impact from Brexit, a prospect that has not encouraged investors.

With the recovery of the currency union still relatively fragile, and inflation only just edging back into positive territory, the outlook of the Euro remained somewhat muted as a result.

Eurozone Data Predicted to Be of Little Impact for GBP/EUR Exchange Rate

Domestic data is expected to remain a secondary concern to markets over the coming week, although the latest German Factory Orders and Eurozone Retail PMIs could galvanise greater demand for the single currency.

While ecostats are of limited impact thanks to the dramatic shift in circumstances prompted by the EU referendum any additional signs of strength within the Eurozone could buoy confidence in the Euro.

However, if figures instead point towards weakness then the GBP EUR exchange rate could regain some ground, assuming that anxiety over the future of the UK economy eases somewhat.