Forex

British Pound Trades on a Narrow Band against the Euro

The pound has been trading within a relatively narrow band against the euro on Thursday.

The GBP/EUR exchange rate is currently at €1.1348, as investors reacted to a weaker Eurozone Gross Domestic Product (GDP) print.

On the contrary, the pound pulled back from recent multi-month lows against the US dollar. However, the recovery may be affected by the current Brexit negotiations.

GBP/USD is currently trading around 1.3417. On the downside, support comes in around 1.3300 before the recent six-month low of 1.3204 comes into play.

The Eurostat’s final GDP estimate for the first quarter is at 2.5 percent year-on-year. It is down from its previous score of 2.8 percent. The results were similar from the previous readings.

Furthermore, an accelerated rise in household consumption boded relatively well for the block, and should give the European Central Bank (ECB) policymakers something more to be happy about.

Meanwhile, Germany’s factory order numbers for April fell 2.5 percent. According to the expectations, it is bound to rise 0.8 percent.

This negated any positive sentiment gained from the GDP result, and make pound euro trading sideways.

Brexit Backlash

According to news released on Thursday, a major row between the United Kingdom Prime Minister Theresa May and Brexit minister David Davis over the government’s final position on a backstop for Northern Ireland could weigh on Sterling in the days to come if no agreed position is found.

Davis seeks a firm end-date for the customs union plan. He said, “The Prime Minister has already made public the fact that we expect to put a time-limit on the backstop proposal.”

On the other hand, May prefers an open-ended agreement when the UK leaves the EU. The EU withdrawal bill returns to the House of Commons () on June 12, with the government looking to overturn several House of Lords amendments.

Investors trod bearishly around the pound as a result, with signs of conflict with the ruling party and stagnation in the negotiation process which made Sterling vulnerable.

In addition, the investors are concerned over the possibility of the US to respond with higher tariffs once again.

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