GBP/EUR Exchange Rate Falls as Bercow Axes Brexit Vote using 1604 Convention

Pound Euro (GBP/EUR) Exchange Rate Slides on Third ‘Meaningful Vote’ Uncertainty

UPDATE: The Pound Euro (GBP/EUR) exchange rate continues to fall, with the pairing currently trading at an inter-bank rate of €1.1637 as – in a dramatic turn of events – House Speaker John Bercow stopped the planned third ‘meaningful vote’ on Brexit using a 1604 convention on ‘time wasting’ in the House of Commons.

Sterling continues to struggle to hold onto last week’s gains as traders contemplate the multiple Brexit possibilities that have opened up including a second referendum or even a general election.

Commenting on this, Chris Turner, Head of Foreign Exchange Strategy at ING, London said:

‘With Sterling one-week implied volatility suggesting the currency is coiled like a spring, there is a path for substantial upside break-out – were a benign path of Brexit events to unfold.’

Also emerging is uncertainty whether or not Theresa May’s Brexit withdrawal agreement will be put to a vote for a third time during this week’s session.

Foreign Secretary, Jeremy Hunt has said that while a ‘lot more work’ is required, there were ‘encouraging signs’ that objecting MPs were coming around to the PM’s deal.

Pound Euro (GBP/EUR) Exchange Rate Slips as Eurozone’s Trade Balance Rises

UPDATE: The Pound Euro (GBP/EUR) exchange rate continues to slide, and the pairing is currently trading at an inter-bank rate of €1.1681.

Data from the Eurozone this morning showed that the bloc’s trade surplus with the US and its deficit with China both increased in January.

Eurostat showed that the surplus in goods trade with the US rose by €11.5bn from a previous €10.1bn.

The Eurozone’s deficit with China increased to €21.4bn from €20.8bn the previous year.

Pound Euro (GBP/EUR) Exchange Rate Falls despite 29 March EU Departure Being ‘Physically Impossible’ According to Hammond

The Pound Euro (GBP/EUR) exchange rate slipped over the course of the morning, with the pairing currently trading at an inter-bank rate of €1.1668.

The Pound fell back from its position last week, as the UK currency was supported by the relief that a no-deal Brexit was likely to be averted while an Article 50 extension is being requested by MPs.

It is expected the Prime Minister’s Brexit withdrawal agreement will be voted upon for a third time during the first half of this week.

However, Chancellor Philip Hammond has said that May’s deal would only be put to MPs if it had enough support, saying it would be put before Parliament if ‘enough of our colleagues and the DUP are prepared to support it.’

The Chancellor further said that the PM does not yet have the numbers to secure the deal, although he has stated this is ‘a work in progress.’

He also added that it was now ‘physically impossible’ for the UK to leave the European Union on 29 March.

Sterling (GBP) Slips as Third ‘Meaningful Vote’ Nears

Theresa May due to hold her third vote to attempt to pass her withdrawal agreement on Tuesday or Wednesday.

It has been noted by Commerzbank Analysts that a vote on her agreement on Tuesday ‘would constitute a signal that she considers it possible that her deal will be accepted’, stating:

‘Admittedly, her views were wrong so often in the past that that would not necessarily constitute a strong GBP positive signal, but it should no doubt have a moderately positive effect on the British currency.’

Pound (GBP) Slides as UK House Price Rise Fails to Bounce into Spring

This morning, the UK Rightmove House Price Index data was released, showing that house prices rose by 0.4% between February and March.

This was the lowest monthly rise at this time of year since 2011, with Rightmove blaming Brexit uncertainty for delaying ‘the usual spring bounce.’

Rightmove Director, Miles Shipside commented:

‘While March marks the start of spring, temperatures have yet to rise in the housing market. Buying activity remains cooler than usual, with hesitation as some buyers await a more settled political climate.

‘There’s greater resilience the further away you get from the London market, and there’s a sound bedrock of demand for the right property at the right price, reinforced by ongoing housing needs combined with cheap mortgage borrowing.’

Pound Euro Outlook: Will the GBP/EUR Exchange Rate Slip on UK Average Earnings?

Looking ahead to Tuesday morning, the Pound (GBP) could slide against the Euro (EUR) following the release of January’s UK average earnings.

If average earnings rise by 3.3% compared to the previous rise of 3.4%, it could dampen sentiment in Sterling as this would represent a slowing.

January’s UK unemployment rate is also due for release, which could cause the pairing to rise if unemployment holds steady at 4%.

The single currency could make further gains following the release of Germany’s ZEW economic sentiment survey for March.

If economic sentiment rises from -13.4 to -11.3 as forecast, the Pound Euro (GBP/EUR) exchange rate could slide.

Millie Empson

Contact Millie Empson