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Euro Pound (EUR/GBP) Exchange Rate Boosted on Italy Budget Compromise and Brexit Deal

Euro/Pound (EUR/GBP) Exchange Rate Gains as Italy Hints at Compromise on Budget

The Euro Pound Sterling (EUR/GBP) exchange rate rose this morning, and is currently trading at £0.8846, as Italy hints at possible compromise on next year’s budget deficit in a bid to avoid disciplinary action from Brussels.

Yesterday, Deputy Prime Minister Matteo Salvini, said that ‘no one is stuck’ to the previously proposed budget deficit of 2.4% of GDP, which was in breach of the EU’s budget deficit rules.

This willingness to compromise has restored some market faith in the single currency – helping reduce EUR’s recent weakness.

The EUR/GBP exchange rate was further bolstered after the EU and UK agreed over the Brexit withdrawal agreement, with the British Prime Minister Theresa May describing the deal as a ‘necessary step to build the trust between the UK and the EU’ and providing ‘an unprecedented and ambitious future partnership.’

EUR/GBP Exchange Rate Traders await Draghi Speech

The EUR/GBP exchange rate could be effected by today’s speech to be given by the President of the European Central Bank (ECB), Mario Draghi, with investors listening out for any bullish comments after the recent uptick of Eurozone optimism.

EUR strengthened against GBP as the other half of the Eurozone’s major concerns – Brexit – passed a key obstacle on Sunday when 27 EU leaders endorsed Theresa May’s proposed withdrawal agreement.

Pound Euro Falls as MPs’ Brexit Objections Rattle Markets

The Pound Euro (GBP/EUR) exchange rate fell by 0.2% after Italy hinted at an adjustment of next year’s budget, relieving pressure on EUR and bolstering the single currency as investor’s confidence returned.

GBP was unmoved by Theresa May’s success in securing the EU’s agreement over her withdrawal deal, with increasing concerns coming from the House of Commons as MPs express scepticism, with her opposition leader of the Labour Party, Jeremy Corbyn, calling her outlined Brexit deal ‘a miserable failure’.

Theresa May has threatened MPs by saying that if her Brexit deal with the EU is turned down, then there is likely to be ‘no Brexit at all’ – with any rejection further leading negotiations to ‘go back to square one’, further dampening market sentiment in Sterling.

Former Foreign Secretary, Boris Johnson, said that the EU had played a ‘very clever trick’ and that the ‘other EU countries have signed the deal immediately, because they know that they have us exactly where they want us.’

G20 and Brexit Expectations Likely to Steer EUR/GBP Exchange Rate for Week Ahead

The Euro Pound (EUR/GBP) exchange rate could face a dip on Thursday, with the release of November’s Eurozone business climate indicator expected to show a deterioration.

Friday will also see the publication of the Eurozone’s latest consumer price index (CPI) stats with low expectations likely to further dampen market confidence in EUR.

The Pound, meanwhile, will be facing turbulence as Theresa May attempts to pass the Brexit withdrawal agreement through Parliament.

With critics of the deal becoming increasingly vocal, fears of a no deal may throw Sterling back into a state of volatility.