GBP/EUR: Brexit Article 50 Parliament Vote Nears as Pound Holds Ground against Euro

Pound to Euro Exchange Rate Holds its Ground amid Brexit Hopes and Weak Eurozone Data

UPDATE: Investors continued to find the Pound Sterling to Euro (GBP/EUR) exchange rate resiliently appealing on Thursday afternoon.

With UK Parliament debating the issue of delaying Article 50 and the formal Brexit date, investors were hesitant to move too much on the British currency.

If the results of the vote are surprising they could cause some Pound movement overnight, but otherwise other Brexit developments or tomorrow’s Eurozone inflation data will be in focus.

Pound to Euro Exchange Rate Holding Most of Yesterday’s Gains on Brexit Expectations

UPDATE: Despite a lack of major developments so far today, the Pound Sterling to Euro (GBP/EUR) exchange rate has held most of yesterday’s strong gains and is trending fairly closely to its 2019 best.

As Parliament debates over whether or not to delay Article 50 and the Brexit process gets underway, investors are hesitant to move too much on Sterling (GBP).

The Pound was also little affected by news that an amendment for a second referendum was unlikely to find enough support to pass.

Pound to Euro (GBP/EUR) Exchange Rate Surges as MPs Vote to Reject No-Deal Brexit

The Pound’s (GBP) volatility this week has been pronounced, as investors react to the latest rollercoaster of Brexit developments. The Pound Sterling to Euro (GBP/EUR) exchange rate saw another surge in demand yesterday on hopes a no-deal Brexit would be avoided.

Since opening this week at the inter-bank level of €1.15, GBP/EUR has trended with an upside bias on Brexit hopes. GBP/EUR struggled at various points over the past few days but has also tested its best levels since 2017 at multiple points.

Amid yesterday’s Parliament vote in which a no-deal Brexit was rejected, GBP/EUR surged in demand and trended near its best levels again. At the time of writing, GBP/EUR was trending over a cent higher and near the pair’s best levels since 2017.

The significance of these Brexit votes is leaving the Pound as the most influential major currency this week, but the Euro has struggled to hold its ground regardless amid mixed Eurozone data.

Pound (GBP) Exchange Rates Surge as No-Deal Brexit Rejected

Wednesday’s session saw investors piling into the Pound (GBP) again, as while the government’s soft Brexit plan was defeated again this week, hopes are rising that domestic opposition to a no-deal Brexit is strong enough to prevent it from ever happening.

MPs surprisingly voted in favour of an amendment to prevent a no-deal Brexit under any circumstances, which was attached to the main motion.

As the UK government wished to keep the option of no-deal on the table and maintain control over the Brexit process, Conservative Party MPs were whipped to vote against the amendment.

However, ultimately MPs voted against the main motion of a no-deal Brexit. Many Conservative Party MPs also voted against it, with some resigning from their positions after defying the government whip.

The events were perceived as a fresh sign that UK Prime Minister Theresa May had lost control of her party, but the Pound was still highly appealing due to Parliament’s strong rejection of no-deal.

Investors now expect the Brexit process will be formally delayed, keeping Sterling demand buoyed.

Euro (EUR) Exchange Rates Fail to Hold as German Inflation Weakens

Continued signs of slowdown in Germany’s economy have left investors hesitant to buy the Euro (EUR) versus a surging Pound (GBP) today.

This morning, Germany’s final February Consumer Price Index (CPI) inflation rate results were published, and fell short of expectations in both main prints.

Monthly inflation only rebounded to 0.4%, while yearly inflation rose to 1.5% rather than the expected 1.6%. France’s February inflation largely met expectations and had limited impact on the Euro.

The data followed this week’s mixed Eurozone industrial production stats. Eurozone industrial production beat forecasts overall, but German industrial production unexpectedly contracted.

With German data still disappointing investors this week, concerns about Germany’s economic outlook are persisting and weighing on hopes of the Eurozone economy seeing a positive turn.

Pound to Euro (GBP/EUR) Exchange Rate Investors Await Brexit Delay Vote and Eurozone Inflation

Driven by Brexit developments so far this week, the Pound to Euro (GBP/EUR) is likely to remain volatile on Brexit news as the week heads to a close as well.

With Tuesday and Wednesday’s Brexit votes both causing market jitters and containing a few of their own surprises, the Pound (GBP) could be in for another sharp reaction to tonight’s vote on whether or not to delay Brexit.

It is widely expected that MPs will vote for Brexit to be formally delayed during today’s vote. As it is expected already, it may not change the Pound’s movement much.

However, any surprises or indications of the next steps on Brexit will remain in focus. For example, if the EU indicates that it will not allow a short delay and only a long delay, this could cause market jitters.

Brexit developments will continue to drive Sterling through the end of the week, but Friday’s Eurozone data could cause some Euro (EUR) movement if it surprises investors.

German wholesale prices from February and Eurozone inflation rate stats from February could also cause some Pound to Euro (GBP/EUR) exchange rate movement at the end of the week.

Josh Jeffery

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