GBP/EUR Exchange Rate Dented by Trump’s Brexit Deal Criticism
UPDATE: The Pound Euro (GBP/EUR) exchange rate is back on the defensive again this morning after US President Donald Trump took potshots at Theresa May’s Brexit deal.
Speaking to reporters yesterday, Trump suggested that while the current agreement ‘sounds like a great deal for the EU’ it could hurt a future UK-US trade deal.
“Right now as the deal stands… they may not be able to trade with the U.S., and I don’t think they want that at all. That would be a very big negative for the deal.” https://t.co/2w2eKddZfU
— Bloomberg Brexit (@Brexit) November 26, 2018
Further denting GBP were fears that Trump’s comments will also weaken the chances of the withdrawal deal making it through Parliament next month.
GBP/EUR Exchange Rate Traders Welcome Brexit Progress
The Pound Euro (GBP/EUR) exchange rate punched higher last week as markets welcomed reports that the UK and EU were making progress towards finalising a Brexit deal.
However for much of the first half of the week these gains proved elusive, with GBP/EUR stalling as EUR investors braced for the European Commission’s verdict on Italy’s 2019 budget.
This saw the Commission ultimately rule on Wednesday that the budget broke EU fiscal regulations and announce it would begin disciplinary proceedings against Rome, although the Euro made some tentative gains following the ruling amid optimism of a possible reconciliation between Rome and Brussels.
Sterling finally found its feet on Thursday, with GBP/EUR shooting up over half a cent on reports that a declaration outlining post-Brexit relations between the UK and EU had been ‘agreed in principle’.
.@EU_Commission agreed today the draft Political Declaration on the framework of the future EU-U.K. relationship. I have informed @eucopresident that this text is agreed at negotiator level and in principle at political level, subject to endorsement by Leaders on Sunday. #Brexit pic.twitter.com/VCNnEqxptJ
— Jean-Claude Juncker (@JunckerEU) November 22, 2018
These gains were then extended at the very end of the week as the Eurozone’s latest PMI figures revealed growth across the bloc’s private sector had slowed to a four-year low in November.
Pound Euro (GBP/EUR) Exchange Rate Steady as EU Leaders Back Brexit Deal
The Pound Euro (GBP/EUR) exchange rate remains rangebound at the start of this week’s session after EU leaders signed off on a withdrawal deal with the UK.
While investors welcomed the news they are likely to remain aware that the hard-won deal must now pass through the House of Commons, where it is likely to meet a hostile reception.
However the EU has made it clear that should it be voted down, no other offer will be made to the UK.
Speaking to the BBC, President of the European Commission, Jean-Claude Juncker proclaimed ‘this is the deal. This is THE deal’ as he ruled out any further alterations.
GBP/EUR Exchange Rate Forecast: Can May Sell Her Brexit Deal to MPs?
Looking ahead, the Pound Euro (GBP/EUR) exchange rate is likely to be hit by volatility over the next couple of weeks as Theresa May attempts to sell the Brexit deal to her MPs ahead of a Commons vote in early December.
Analysts suggest that considerable opposition to the deal means that May is likely to have her work cut out for her and Sterling is likely to remain highly sensitive to comments from MPs.
In the meantime the Bank of England (BoE) will publish a report on the Brexit deal this week, and GBP investors will be eager to hear what the bank’s assessment of the deal will be.
Meanwhile the release of a slew of German data is likely to drive movement in the Euro this week.
We may see the single currency retreat if Germany’s latest inflation and employment data appears to indicate that economic activity in the country has continued to slow in the fourth quarter.