Pound Sterling to Euro (GBP/EUR) Exchange Rate Surges on Developments in Brexit Outlook

Pound to Euro Exchange Rate Rises as Investors Hope no-deal Brexit can be Avoided

UPDATE: Investors piled into the Pound (GBP) today, driving the Pound Sterling to Euro (GBP/EUR) exchange rate to new weekly highs.

GBP/EUR briefly touched on its best levels since 2017 earlier in the day, as investors digested news that the Labour Party would back a second referendum, as well as rising bets that the Brexit process would be delayed.

Sterling’s gains were limited after UK Prime Minister Theresa May revealed that if the next vote on its Brexit plan on the 12th of March fails, it will hold votes on a No-deal Brexit and a short extension of Article 50.

Pound to Euro Exchange Rate Fails to Capitalise on Brexit Rumours

UPDATE: With the rumour flaring up today that Brexit could be delayed by two years, the Pound Sterling to Euro (GBP/EUR) exchange rate saw mixed movement throughout the day.

Concerns that the UK would not find a solution to Brexit in time to avoid a no-deal kept pressure on the Pound (GBP), but if the Brexit date were delayed it would be a relief to investors.

The Euro (EUR) was able to avoid major losses due to weakness in the US Dollar (USD), its biggest rival.

Investors now anticipate Eurozone confidence data due in the coming days, as well as potential Brexit developments.

Pound to Euro (GBP/EUR) Exchange Rate Slides as Euro Benefits from Rival Weakness

UPDATE: While speculation for a possible Brexit delay helped the Pound Sterling to Euro (GBP/EUR) exchange rate to hold most of last week’s gains, the pair slipped slightly at midday.

The Euro (EUR) saw stronger demand as investors sold its rival, the safe haven US Dollar (USD), amid higher market demand for risk-taking.

News that France and Germany had agreed to proposals for a Eurozone budget also kept the Euro supported today.

Pound to Euro (GBP/EUR Exchange Rate Avoids Losses despite Close Shave on Brexit Votes

Last week saw the Pound Sterling to Euro (GBP/EUR) exchange rate put in solid gains, despite concerns that the Brexit process was increasingly going down to the wire. Sterling (GBP) has benefitted from speculation that a soft Brexit is becoming more possible.

After opening last week at the interbank level of €1.14, GBP/EUR saw a jump of around a cent on Tuesday and the pair sustained most of those gains throughout the week.

GBP/EUR ended the week near the key interbank level of €1.15, and continued to edge higher when markets opened today. GBP/EUR is trending closely to its best levels since last month.

Boosted by Brexit speculation, the Pound has climbed versus a slightly weaker Euro (EUR). The Euro has been unappealing in recent weeks due to weaker Eurozone data.

Pound (GBP) Exchange Rates Climb despite Delay to Parliamentary Brexit Vote

Sterling (GBP) has been able to hold onto the gains seen last week, as it continues to edge higher this morning.

This was despite the UK government announcing over the weekend that it would delay the next parliamentary vote on its Brexit plans.

Parliament had been set to vote on the government’s Brexit agreement again this week, but Theresa May announced she would push back the next meaningful vote on the deal to 12 March – putting it a concerning 17 days before Brexit day.

Instead of being weighed down by concerns of Brexit running out of time and leading to no-deal, investors bought the Pound on hopes that the formal Brexit date itself was close to seeing a delay.

UK Prime Minister Theresa May is under increasing pressure and calls to delay the Brexit process.

There is also rising speculation that the EU could delay Brexit itself to 2021 to give more than enough time for talks, encompassing the entirety of the tentatively planned ‘transition period’.

Euro (EUR) Exchange Rates Kept Under Pressure by Cloudy Eurozone Outlook

As recent Eurozone data has continued to paint a murky picture for its economic outlook, analysts predict there could be further weakness ahead for the Euro (EUR).

Part of the Pound to Euro (GBP/EUR) exchange rate’s gains over the last week was due to investors selling the shared currency on fears that the Eurozone’s economic slowdown could last longer and be deeper than previously expected.

According to analysts at Goldman Sachs:

‘Euro will likely continue to struggle to outperform as long as the outlook for domestic (and China) growth remains in question. 

Our economists expect the economy to regain some momentum beyond Q1 … pickup to above-trend growth in the second half of 2019.’

Pound to Euro (GBP/EUR) Exchange Rate Outlook Would Rise on Brexit Delay

There are now just 33 days until the Brexit is due to formally take place, but there is still no clarity in how it will unfold and the next meaningful vote on the matter is not for two weeks.

If there are no notable developments in Brexit soon, no-deal fears could flare up again and knock the Pound to Euro (GBP/EUR) exchange rate lower.

On the other hand, GBP/EUR could surge if there are any signs or developments that point towards the Brexit process being delayed.

A Brexit delay could offer the Pound (GBP) some significant relief.

This week’s UK data is unlikely to be particularly influential in comparison, but Thursday’s UK consumer confidence data from GfK could cause some Pound movement.

As for the Euro, the shared currency is most likely to be driven by news that influences the Eurozone outlook, such as upcoming Eurozone stats and the strength of rivals like the US Dollar (USD).

German confidence data on Tuesday, Eurozone confidence on Wednesday and key German data later in the week is likely to cause Pound to Euro (GBP/EUR) exchange rate movement if it surprises investors.

Josh Jeffery

Contact Josh Jeffery