Euro Pound (EUR/GBP) Exchange Rate Slides on NI Protocol Breakthrough
The Euro Pound (EUR/GBP) exchange rate is softening in the wake of an agreement between the UK and EU over the contentious Northern Ireland protocol deal.
At time of writing, the EUR/GBP exchange rate is around £0.8771, a 0.27% fall from this morning’s opening levels.
Pound (GBP) Buoyed on Post-Brexit Optimism
The Pound is enjoying modest gains against most of its peers this morning as Prime Minister Rishi Sunak unveiled the ‘Windsor Framework’, the post-Brexit trade agreement between the UK and the EU. The move ends months of uncertainty and roadblocks win negotiations.
After staging final talks with European Commission President Ursula von der Leyen, Sunak is set to unveil the agreement in parliament, where a vote on certain elements of the protocol will take place. Despite the positivity of avoiding a potential trade war with the EU, GBP investors are now concerned with how the Democratic Unionist Party (DUP) and Sunak’s own Conservative party will react to the agreement. When asked if the agreement would continue regardless of opposition, Sunak all but confirmed it:
‘It’s an incredibly positive and comprehensive agreement, ensures that we have smooth flowing trade within the UK internal market.
‘This is not necessarily about me or any one political party. This is about what’s best for the people in communities and businesses in Northern Ireland.’
If volatility within the Tory party was to return, the Pound come under renewed pressure as Sunak could be dragged into another Conservative leadership contest.
Euro (EUR) Supported by Recession Optimism
The Euro (EUR) is experiencing modest success against its weaker peers this morning, despite slipping against the rallying Pound. Despite the prevailing cautious market mood amid headlines out of Ukraine, the single currency is buoyed on optimism surrounding the Eurozone economy.
European Central Bank (ECB) Chief Economist Philip Lane buoyed investors in an interview released earlier this morning. In a double boost, Lane admitted that inflationary pressures are finally easing, including crucial core prices. Lane also admitted that the central bank have not finished with its aggressive rate hikes. Lane said:
‘There’s significant evidence that monetary policy is kicking in. For energy, food and goods, there’s a lot of forward-looking indicators saying that inflation pressures in all of those categories should come down quite a bit.’
Euro Pound Exchange Rate Forecast: BoE Speeches to Bolster the Pound?
Looking ahead, the Euro Pound exchange rate could see further movement with several speeches from Bank of England (BoE) policymakers. All eyes will be on BoE Chief Economist Huw Pill as he takes the stage this afternoon. Any further comments on the central bank’s monetary policy could drive movement.
Meanwhile, the Euro could fluctuate further amid a flurry of economic data released tomorrow. German unemployment is expected to climb modestly to 5.6%, weighing on Europe’s biggest economy. German inflation is set to follow with an expected modest slide. ECB rate hike bets could be impacted as it slides from 8.7% to 8.5%.
