EUR/GBP Exchange Rate Dips Ahead of No-Confidence Vote in May
The Euro Pound (EUR/GBP) exchange rate is trending lower this afternoon, amid speculation Theresa May will emerge victorious from a no-confidence vote later this evening.
At the time of writing, the EUR/GBP exchange rate is down 0.5% from its opening levels, leaving the pairing to hold just above £0.90.
Pound Sterling (GBP) Exchange Rates Bolstered Despite UK Political Chaos
The Pound (GBP) is punching higher against the Euro and the majority of its other peers this afternoon as confidence builds that Theresa May will survive a vote of no-confidence.
Sterling fell overnight on Tuesday when reports first emerged that rebel MPs had garnered the number of letters needed to force a vote against the PM.
However GBP exchange rates quickly rallied at the start of the European session this morning as Theresa May struck a defiant tone outside of Downing Street, vowing to contest the vote ‘with everything I have got’.
The Pound extended these gains in the afternoon as the majority of Tory MPs choose to publicly back the PM, indicating May was likely to survive the vote and reducing fears that a Brexiteer leader could push the UK towards a no-deal Brexit.
"There is a growing confidence in team May that they can win this"@BBCNormanS says a majority of Tory MPs have issued public statements of support for the PM ahead of tonight's confidence vote
— BBC Politics (@BBCPolitics) December 12, 2018
Euro (EUR) Exchange Rates Muted on Mixed Eurozone Industrial Data
Meanwhile the Euro (EUR) is struggling to find any momentum today following the release of the Eurozone’s latest industrial production figures.
According to data published by European statistics agency, Eurostat industrial production accelerated 0.2% in October after contracting the previous month, thanks to strong output growth for capital goods.
However undermining the release was the revision to September’s reading, after production was revised down to -0.6% from the -0.3% than had been initially reported.
EUR/GBP Exchange Rate Forecast: Euro to be Rocked by ECB Rate Decision?
Ignoring Brexit and UK politics for just a minute, there is another event that could have a major impact on the the Euro Pound (EUR/GBP) exchange rate later this week, namely the European Central Bank’s (ECB) final rate decision of the year.
While the ECB is highly unlikely to make any changes to interest rates tomorrow, the bank is widely expected to announce that its substantial stimulus programme will draw to a close by the end of December, much to the delight of markets and policy hawks within the bank.
However its likely to be the Bank’s forward guidance that has the greatest impact on the Euro on Thursday, with the single currency likely to retreat if the recent slowdown in the Eurozone leads to a more cautious outlook from ECB President Mario Draghi, potentially even calling a 2019 rate hike into question.
In the meantime this evening’s ballot is set to dominate Sterling sentiment in the short term, but looking further ahead the any upside potential for the Pound is likely to depend on whether May is able to win any concession from the EU to make her deal more palatable to MPs.