Pound Euro (GBP/EUR) Exchange Rate Surges on Hopes of Soft Brexit
The Pound Euro (GBP/EUR) exchange rate rallied, rising by close to 0.7% this morning following rumours that there could be a delay to Brexit.
The pairing is currently trading at an inter-bank rate of €1.1631, a 21-month high against the single currency.
Commenting on suggestions of a Brexit extension, Michael Brown, Senior Analyst at Caxton FX, said:
‘The Pound’s gains are a result of markets beginning to price in an extension to the Article 50 negotiating period, with reports this morning that the Prime Minister is set to discuss the matter with Cabinet before laying a motion in the Commons this afternoon.’
Another analyst, Craig Erlam of OANDA, said the Pound is soaring on hopes for a soft Brexit. He commented:
‘The Pound is tearing higher on Tuesday as we await another vote in Parliament tomorrow – albeit not on May’s deal, again. The decision comes as the opposition Labour Party threw its support behind a second referendum if it couldn’t get its own Brexit deal over the line and Theresa May opened the door to an extension, having failed to secure amendments with the EU in time for tomorrow’s vote.’
Meanwhile, data released earlier this morning revealed that GfK German consumer confidence remained steady as forecast at 10.8.
However, likely dampening sentiment for the Euro, GfK stated:
‘Consumers feel that the risk of the German economy slipping into recession again has tangibly increased in recent weeks.’
Pound (GBP) Rises on Article 50 Extension Reports
The Pound recovered its feet again this morning, with the GBP/EUR pairing rising after reports that the Prime Minister was considering delaying the UK’s departure from the EU.
Yesterday the pairing fluctuated during a Summit in Sharm El-Sheikh, as the Prime Minister reiterated her opposition to an Article 50 extension.
‘An extension to Article 50, a delay in this process, doesn’t deliver a decision in Parliament, it doesn’t deliver a deal. All it does is precisely what the word ‘delay’ says. Any extension of Article 50 isn’t addressing the issues.’
This caused Sterling to dip against the single currency.
Yesterday it was announced that the second ‘meaningful vote’ was to be rescheduled for 12 March, just 17 days before the 29 March deadline.
GBP/EUR Outlook: Will Sterling Slide on PM’s Refusal to Rule out No-Deal?
The Pound Euro (GBP/EUR) exchange rate could see movement later this afternoon following a speech from the European Central Bank’s (ECB) Yves Mersch.
If Mersch’s tone is dovish about the Euro, it could dampen sentiment for the single currency.
UK Prime Minister, Theresa May is also due to give a speech, which will be watched closely to see if she refuses to rule out no-deal.
If there are signs that May could delay the UK’s exit from the EU it could boost Sterling.
A vote is scheduled in the House of Commons tomorrow on a withdrawal motion which would give MPs the chance to vote on amendments, such as the ‘Cooper amendment’.
The amendment proposed by Labour’s Yvette Cooper and the Conservative’s Nick Boles aims to extend Article 50 if the Prime Minister does not get her deal agreed to by 13 March.
The amendment is said to have further backing from several government ministers, and if it is passed it could see Sterling rise against the Euro.