Homepage » Brexit » Euro to Pound Sterling Exchange Rate Slides as UK Labour Party Pushes for Second Referendum

Euro to Pound Sterling Exchange Rate Slides as UK Labour Party Pushes for Second Referendum

Euro to Pound Exchange Rate Support Limited as Investors Await Fresh Eurozone Data

Signs of a slightly stronger Eurozone economic outlook have not been enough to help the Euro to Pound Sterling (EUR/GBP) exchange rate to hold last week’s recovery, as the pair slipped when markets opened this morning.

Last week was hectic for EUR/GBP, as the pair plunged from the week’s opening level of 0.8680 to touch a year and a half low of 0.8534, before recovering and closing the week at 0.8607.

At the time of writing this morning though, EUR/GBP has slipped slightly again and trends near the level of 0.8570. This put the pair just over half a pence above its worst levels since 2017.

Investors bought the Pound (GBP) again this morning, as hopes rose that the UK was moving away from the possibility of a no-deal Brexit.

Fresh signs that Britain’s opposition Labour Party was pushing for a second referendum to be a condition of the government’s Brexit deal being agreed also supported Sterling this morning.

Euro (EUR) Exchange Rates Lacking in Strong Support as Investors Await Data

Demand for the Euro (EUR) lightened when markets opened this week, as there is a slew of influential Eurozone data due in the coming days but concerns about the Eurozone economy persist.

Recently, Eurozone data has disappointed investors and indicated that the Eurozone’s economic outlook was slower than analysts expected.

However, some data published towards the end of last week, as well as slight improvements in investor confidence, have left markets hopeful that the Eurozone economy could be taking a more positive turn.

Germany’s inflation figures, retail sales figures and unemployment figures all beat forecasts between Thursday and Friday. The Eurozone’s latest unemployment rate also saw an unexpected improvement.

This helped the Euro to recover at the end of last week, but Brexit news has been even more influential for EUR/GBP.

Pound (GBP) Exchange Rates find Boost in Second Referendum Speculation

For most of last week, investors bought the Pound on news that the UK government was planning to offer options for votes on no-deal Brexit and even potentially a delay to the formal Brexit date.

The Brexit is still set to take place on the 29th of March – just a few weeks away.

But if the government position on Brexit is defeated in Parliament and Parliament also votes to avoid a no-deal Brexit, a vote to delay the process will be offered.

While this bullishness faded later in the week, Sterling saw another rise in demand on Monday as investors reacted to the weekend’s news that Britain’s opposition Labour Party would whip MPs to back a second referendum.

Labour Shadow Chancellor John McDonnell said that Labour would not offer its MPs a free vote. This bolstered hopes that a second referendum of some kind was more possible.

On top of this, hopes are rising that the UK government’s Brexit deal is becoming more popular in Parliament as well.

Euro to Pound (EUR/GBP) Exchange Rate Investors Await Eurozone Data

With the UK government not holding its meaningful Brexit vote until next week, the Euro to Pound exchange rate is more likely to be driven by Eurozone data this week, as well as any potential surprising Brexit developments.

Tuesday will see the publication of the Eurozone’s final February PMI stats from Markit, in particular the services and composite prints.

If they beat expectations it could offset some concerns about the Eurozone’s economic outlook and bolster demand for the Euro.

EUR/GBP investors are also highly anticipating Thursday’s session, when the Eurozone’s latest growth projections will be published and the European Central Bank (ECB) will hold its March policy decision.

Britain’s services PMI report, due tomorrow morning, could also influence the Euro to Pound (EUR/GBP) exchange rate slightly if it surprises investors.