EUR/GBP Exchange Rate Rises as ECJ Announces that UK can Reverse Brexit
The Euro Pound Sterling (EUR/GBP) exchange rate is up today, and is trading at £0.8979, as the UK braces itself for tomorrow’s important Brexit vote while British Prime Minister Theresa May makes her last-ditch attempt to gain support for her UK-EU withdrawal deal from the Commons.
EUR was further strengthened against Sterling today with the release of the European Court of Justice’s (ECJ) ruling on Article 50, which the court says would enable the UK to reverse the Brexit process unilaterally.
The Scottish National Party, MEP, Alyn Smith, who was involved in the legal case for Article 50 commented:
‘The timing is sublime. As colleagues in the House of Commons consider Mrs May’s disastrous deal we now have a roadmap out of this Brexit shambles. A bright light has switched on above an ‘EXIT’ sign.’
This has eased EUR investors’ fears over a chaotic Brexit, and has offered an alternative scenario in which the likelihood of the UK staying in the EU has been increased.
The Pound (GBP) meanwhile has been volatile, with the increasing unlikeliness that Theresa May’s vote will get through leaving GBP investors generally cautious ahead of Tuesday.
EUR/GBP Exchange Rate Up as Italy Due to Release Budget Revision
The Euro (EUR) was hit this morning by the release of Germany’s trade balance figures which showed a worse-than-expected decrease.
This left the EUR/GBP exchange rate generally unaffected, with the losses redeemed by today’s release of Germany’s import figures for October increasing to 1.3% against September’s 0%.
The on-going controversy surrounding Italy’s budget deficit is keeping some EUR investors cautious, with Giancarlo Giorgetti, Italy’s Cabinet Undersecretary, saying:
‘By Monday, we will make our conclusions, by then the calculations will be in.’
If Italy’s budget revision is not in accordance with the European Commission’s rules the Eurozone’s third-biggest economy could face disciplinary action, shaking market confidence in EUR.
Pound Euro (GBP/EUR) Exchange Rates Sink as Brexit Uncertainty Mounts ahead of Tuesday’s Important Vote
The Pound (GBP) meanwhile took a pummelling from today’s slew of data releases, with October’s UK manufacturing production figures showing -0.9% – a decrease of -1.1% on September.
Following this was the release of today’s UK non-EU trade balance for October, which also showed a loss at £-4.251B against September’s £-2.946B.
These were then followed by the release of the goods trade balance for October, which also showed a decrease.
These losses were redeemed somewhat by the release of October’s GDP figures, which showed an increase at 0.1% against last month’s 0%, showing some growth in the British economy, albeit very little.
However, as Tuesday’s Brexit vote is imminent, this data went generally unnoticed with investors’ attention fixed firmly on Theresa May as she presses forward against mounting pressure from Parliament.
The Environment Secretary, Michael Gove, however, said that it was unlikely that there would be a second referendum and nor would Article 50 likely affect the Brexit outcome on Tuesday, saying:
‘We voted very clearly – 17.4 million people sent a clear message that we wanted to leave the European Union and that means also leaving the jurisdiction of the European Court of Justice.’
EUR/GBP Outlook: Tuesday’s Crucial Brexit Vote Remains in Focus
The EUR/GBP exchange rate will likely be dictated by political forces this week, with Brexit’s crucial vote due to face its showdown tomorrow in an increasingly divided Parliament.
However, with increasing options for the UK to remain in the EU, with the ECJ’s announcement on Article 50, and increasingly vocal MPs within Parliament calling for a second referendum, this has made some EUR investors confident that the UK may reverse the Brexit process.
Italy’s budget revision will also remain in focus for EUR investors, with mounting concern that it will contradict the EC’s guidelines, throwing the single currency back into a state of volatility as tensions mount within the EU.
Tomorrow, meanwhile, will see the release of Germany’s ZEW survey for economic sentiment in December, which is expected to decrease, showing a lack of market confidence in the Eurozone.
This is also followed by the ZEW current situation figures for December, which are also expected to decrease.
More importantly for the Pound, tomorrow will see the release of the average earning figures for the UK, which are expected to remain static.