GBP/EUR Exchange Rate Surges Following Reports Brexit Deceleration Text Agreed
UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate has jumped 0.5% this morning following reports the UK and EU have agreed on the draft text for their future relationship.
I have just sent to EU27 a draft Political Declaration on the Future Relationship between EU and UK. The Commission President has informed me that it has been agreed at negotiators’ level and agreed in principle at political level, subject to the endorsement of the Leaders.
— Donald Tusk (@eucopresident) November 22, 2018
The news is a welcome relief to GBP investors as it likely allows for a Brexit deal to be finalised at an EU summit of leaders taking place this weekend.
Theresa May will make a statement on the draft deceleration later on Thursday, with markets likely to pay close attention to the response from MPs after considerable opposition to the draft withdrawal agreement last week sent the Pound into a tailspin.
GBP/EUR Exchange Rate Flat in Wake of May’s Brussels Trip
The Pound Sterling to Euro (GBP/EUR) exchange rate is trading in a narrow range this morning with Theresa May and European Commission President Jean-Claude Juncker having been unable to finalise a Brexit deal.
At the time of writing the GBP/EUR exchange rate remains virtually unchanged from this morning’s opening rate as investors mull over the latest Brexit developments.
Pound Sterling (GBP) Subdued as More Work Needed on Brexit Text
The Pound (GBP) is treading water against the Euro (EUR) and the majority of its other peers this morning after May and Juncker were unable to reach an agreement on a declaration outlining the future UK-EU relationship.
Following a two-hour meeting with the EC chief on Wednesday, May was forced to admit that, while progress had been made, there were still a number of issues that needed to be ironed out before an agreement could be reached.
"Progress has been made" but "there are some further issues that need resolution" – Prime Minister Theresa May to return to Brussels on Saturday for more #Brexit talks https://t.co/Yp4autZ5h5 pic.twitter.com/0eDwiaIVuX
— BBC News (UK) (@BBCNews) November 21, 2018
The news is unlikely to be welcomed by GBP investors as it throws doubt on an upcoming EU summit to approve the draft Brexit deal, with German Chancellor Angela Merkel signalling she will not attend Sunday’s gathering of leaders unless the final text on future co-operation is in place.
May will now return to Brussels on Saturday for crunch talks in an attempt to finalise the declaration.
Euro (EUR) Exchange Rates Steady ahead of ECB Minutes
At the same time the Euro (EUR) is also rangebound this morning as EUR investors await the release of the minutes from the latest European Central Bank (ECB) meeting.
The minutes are expected to cover the impact of global trade tensions and the downside risks they pose to Eurozone growth, but are not likely to deliver any major new insights.
More likely to be of interest is the ECB’s language regarding its plans to wind down its stimulus programme, with EUR investors looking for confirmation this will be completed in December.
GBP/EUR Exchange Rate Forecast: Slowing Eurozone PMI Figures to Continue to Drag on Euro?
Looking ahead, the Pound Euro (GBP/EUR) exchange rate may finally make some headway on Friday, with the publication of the Eurozone’s latest PMI figures.
Economists forecast growth in the bloc’s private sector will have continued to slow this month which, after slowing to its worst pace since 2016 in October, will likely point to the Eurozone GDP remaining subdued in the fourth quarter.
Meanwhile in the absence of any domestic data, Brexit is likely to remain the main catalyst for movement in Sterling through to the end of the week, potentially capping GBP gains if markets remain wary about May’s ability to finalised a deal ahead of Sunday’s EU summit.