Pound Euro (GBP/EUR) Exchange Rate Rallies Ahead of No-Deal Brexit Vote
The Pound Sterling to Euro (GBP/EUR) exchange rate was placed back on the offensive this morning, with Sterling rallying ahead of this evening’s Brexit vote on the expectation that MPs will reject a no-deal Brexit.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1646, up roughly 0.6% so far this morning.
Pound Sterling (GBP) to Be Lifted by No-Deal Brexit Vote?
The Pound (GBP) rallied against the Euro (EUR) and the majority of its other peers at the start of the European session this morning as investors awaited a vote to determine whether the UK should leave the EU without a deal.
Analysts are confident that today’s vote will see MPs rule out a no-deal Brexit, opening the door to a possible delay to Brexit if Parliament votes in favour of extending Article 50 in a subsequent debate on Thursday.
This has seen Sterling rally from its worst levels struck yesterday afternoon prior to MPs overwhelmingly voting to reject Theresa May’s withdrawal deal
However, while a vote to delay Brexit is likely to provide some short-term gains for the Pound it will ultimately only prolong the uncertainty that surrounds the whole process, likely leading to further volatility in Sterling over the coming weeks.
Euro (EUR) Losses Trimmed as Eurozone Industrial Production Beats Expectations
At the same time, the Euro (EUR) has been able to trim some of its losses against the Pound (GBP) this morning following the publication of the Eurozone’s latest industrial production figures.
According to data published by Eurostat, industrial production rebounded from -0.9% to 1.4% in January, beating forecasts of a more modest 1% growth.
— EU_Eurostat (@EU_Eurostat) March 13, 2019
This upswing in production comes despite a shock contraction in German factory output at the start of the year, and helped to limit concerns over a prolonged slowdown in the Eurozone economy.
GBP/EUR Exchange Rate Forecast: Will Hammond’s Spring Statement Have Any Impact on Sterling?
While the no-deal Brexit vote is clearly the main catalyst for movement in the Pound Euro (GBP/EUR) exchange rate today it is not the only event on the calendar for the session.
Also on the docket today will be Philip Hammond’s Spring Statement in which the Chancellor will give MPs the latest growth forecasts from the Office for Budget Responsibility, as well as provide an update on the government’s spending plans for the coming year.
However it appears unlikely the Spring Statement will have any real bearing on the direction of Sterling today, with the Chancellor not expected to drop any fiscal bombshells and the entire statement expected to be overshadowed by the ongoing Brexit drama.
Meanwhile, the focus for EUR investors in the second half of the week will likely be on the Eurozone’s final CPI reading for February, which is expected to confirm that underlying inflation in the bloc fell back again last month.