EUR/GBP Exchange Rate Rangebound, Could the DUP Jeopardise Boris Johnson’s Brexit Deal?
The Euro Pound Sterling (EUR/GBP) exchange rate held steady today, with the pairing currently trading around £0.864 after the UK and the EU secured a compromise Brexit deal, despite the Democratic Unionist party’s (DUP) rejected of Prime Minister Boris Johnson’s proposal.
The DUP commented that they could not support the PM’s deal due to what had been ‘suggested on customs and consent issues’ along with ‘a lack of clarity on VAT’. However, with the DUP being crucial for Boris Johnson’s deal gaining a majority in a Parliamentary vote, UK markets are feeling increasingly jittery on the possibility of a no-deal.
Opposition leader Jeremy Corbyn was also sceptical of the deal, saying:
‘These proposals risk triggering a race to the bottom on rights and protections: putting food safety at risk, cutting environmental standards and workers’ rights, and opening up our NHS to a takeover by US private corporations.’
As a result, the GBP/EUR exchange rate has remained steady today with political uncertainties surrounding Brexit continuing to weigh on market confidence in the Pound.
In UK economic news, today saw September’s UK retail sales flatten at 0%, but with Brexit dominating market movements today, this left Sterling unmoved.
EUR/GBP Exchange Rate Holds Steady as European Markets Focus on European Summit
The Euro (EUR) failed to gain on the Pound (GBP) today with European markets remaining fixated on the ongoing European Council Summit.
However, with expectations running high that European Central Bank policymakers could comment on the struggling Eurozone economy, we could see the single currency begin to ease on exacerbated economic woes.
Analysts at the investment firm Unigesstion were, however, upbeat in their assessment:
‘The Eurozone has been a source of concern to us for 20 consecutive months in light of alarming signs of broad-based deceleration. But things seem to be changing… With the ECB’s new President [Christine Lagarde] pushing for more fiscal spending, an extremely low Euro and a lower exposure to the trade war, we think European growth assets could become more appealing.’
EUR/GBP Outlook: Could Sterling Rise on Parliamentary Brexit Consensus?
Brexit developments will likely continue to drive the EUR/GBP exchange rate for the rest of this week. Any indications that the UK Parliament could provide a majority behind Boris Johnson’s Brexit deal in Saturday’s crunch vote could see Sterling rise on ebbing no-deal fears.
However, if British MPs exhibit increasing criticism of Boris Johnson’s deal, we could, however, see the EUR/GBP exchange rate edge higher as the UK is wracked by heightened political uncertainties ahead of the October 31 Brexit deadline.