Pound Euro (GBP/EUR) Exchange Rate Rises as Mogg Relieves Fears of Brexit No-Deal

Pound Euro (GBP/EUR) Exchange Rate Rises as Conservative Jacob Rees-Mogg Relieves Fears of Brexit No-Deal

UPDATE: The Pound further gained on the Euro today after the publication of the Eurozone’s consumer confidence figures, which fell to a worse-than-expected -7.9.

Today also saw the Pound rise on increased optimism that Labour MP Yvette Cooper’s Brexit amendment would likely be passed by opposition leader, Jeremy Corbyn, increasing the likelihood of a second referendum and the extension of Article 50.

Pound investors had some fears over a Brexit no-deal relieved by comments from Conservative Brexiteer Jacob Rees-Mogg, who said:

‘[If Theresa May] can get a deal with the backstop, we’d mostly hold our nose and vote for it. At least then no-Brexit comes off the table.’

Pound Euro (GBP/EUR) Exchange Rate Increases as Market Considers Brexit ‘Most Likely’ to be Delayed

The Pound Euro (GBP/EUR) exchange rate is up today and is currently trading round €1.1451 on the inter-bank market, an increase of over 0.4%.

Sterling (GBP) has gained on the Euro (EUR) as the perceived likelihood of a delay to Brexit increases, with the former chancellor George Osborne saying ‘[a]t the moment delay looks the most likely option.’

An amendment which was led by Labour MP Yvette Cooper and Tory Nick Boles on Monday is looking increasingly likely to be backed by the Labour leader Jeremy Corbyn.

Shadow Chancellor John McDonnell commented:

‘[The amendment] says to the Government you’ve run down the clock so much, it looks as though if you can’t get a deal by February 26 . . . the Government will then have to bring forward proposals to extend that.’

Pound investors have been buoyed as the Brexit deadlock continues to be challenged, opening up the possibility of a second referendum, and also allowing for a possible extension of Article 50.

A delaying of Brexit and a possibly prevention of a no-deal, perceived as the worst outcome for currency markets, has increased sentiment in GBP.

GBP/EUR Exchange Rate Rises Despite May’s Brexit Approach Facing Criticism

Today will see the Scottish First Minister Nicola Sturgeon arrive in London to continue Brexit talks with Prime Minister Theresa May.

Sturgeon, however, has remained pessimistic about Theresa May’s approach to Brexit, commenting:

‘Her approach doesn’t seem to have changed one iota since that historic defeat she suffered in the House of Commons last week, and it needs to change if any progress is to be made.’

Fears of a Brexit no-deal have plagued the Pound, though, and have prevented Sterling gaining further on the Euro, with George Osborne saying that with the prospect of a Brexit no-deal still a lingering possibility, ‘the gun is held to the British economy’s head’.

EUR/GBP Exchange Rate Drops as Eurozone Economic Sentiment Slides

Today saw the publication of the French business climate figures for January which printed at 103, steadying against December and failing to move the EUR/GBP exchange rate.

The Euro, meanwhile, has failed to make any gains on the Pound after the publication of Germany’s ZEW survey on the current situation for January dropped to 27.6 yesterday.

This was also followed by the publication of the Eurozone’s ZEW survey on economic sentiment for January, which also fell to -20.9 – dampening confidence in the single currency.

The Euro has failed to recover, despite France and Germany signing a new treaty on Tuesday which was intended to provide a bedrock against political turbulence throughout the EU, including Brexit.

French President Emanuel Macron commented:

‘I would rather look our Europe in the face and strengthen it to protect our peoples. That is what we are doing.’

GBP/EUR Forecast: ECB Forward Guidance Could Bolster the Euro

Pound investors will most likely be paying attention to political developments this week, with Theresa May to rallying gain Parliament’s support for her Brexit ‘Plan B’, and with any signs that the political deadlock can be broken, the Sterling could benefit.

EUR traders, meanwhile, will be looking ahead to Thursday and the European Central Bank’s interest rate decision and accompanying forward guidance.

Thursday will also see the publication of the Eurozone’s Markit Services PMI figures for January, which are expected to remain steady or increase, potentially weakening the GBP/EUR exchange rate.

John Cameron

John studied economics at Cambridge University and later became an MSTA qualified Technical Analyst. He began working for TorFX almost a decade ago and now holds a Senior Account Manager position. As well as lending his clients support and guidance, John has produced market commentary and detailed exchange rate analysis for a number of online publications.

Contact John Cameron