GBP/EUR Exchange Rate Rallies on Renewed Brexit Deal Hopes
The Pound Sterling to Euro (GBP/EUR) exchange rate swung higher on Tuesday afternoon, bolstered by reports that Jacob Rees-Mogg will now back Theresa May’s Brexit deal.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1718, up around 0.3% from this morning’s opening levels and striking a new one-week high.
Pound (GBP) Buoyed by Brexit Deal Optimism
The Pound (GBP) is pushing higher against the Euro (EUR) this afternoon, lifted by renewed optimism regarding Theresa May’s chances of getting her Brexit deal through parliament.
This comes after prominent Brexiteer, Jacob Rees-Mogg indicated he would back May’s withdrawal deal in order to prevent Brexit from being cancelled outright.
https://twitter.com/Jacob_Rees_Mogg/status/1110477916775821312
Rees-Mogg’s apparent support is seen as significant by observers as he chairs the influential European Research Group (ERG), whose support could help to swing the numbers in Theresa May’s favour.
However GBP investors will likely remain wary in regards to this development given that Rees-Mogg does not speak for the entire group and that even with the support of the ERG, May’s chances getting her deal through parliament remain about 50-50.
Gloomy German Consumer Confidence Casts Dark Cloud over the Euro (EUR)
At the same time the Euro (EUR) is struggling to hold its ground today, following the release of some disappointing consumer confidence figures from Germany.
According to data published by German research group Gfk, consumer morale unexpectedly fell in March, with the sentiment index sliding from a downwardly revised 10.7 to 10.4 in March, its lowest levels since December.
This comes as consumers become increasingly nervous regarding economic growth in Germany as it becomes clearer that activity is slowing.
Rolf Buerkl researcher at GfK explained:
‘Whilst consumers are certainly not assuming that Germany will fall into recession this year, they do see a noticeable cooling off of economic activity.’
GBP/EUR Exchange Rate Forecast: How Will Parliament’s Indicative Brexit Votes Impact Sterling?
Looking ahead, the Pound Euro (GBP/EUR) exchange rate is likely to remain highly volatile through the remainder of the week as Parliament holds a series of indicative votes in an effort to work out how to proceed with Brexit.
This could help to buoy Sterling if there is strong support for a softer Brexit, a second referendum or even revoking Brexit altogether.
Conversely we could see the Pound sink if MPs are unable to reach a majority for any of the solutions put forward as it leaves it unclear how things may proceed from there.
Meanwhile, EUR investors are likely to be focused on the release of the release of Germany’s latest CPI figures on Wednesday, with an expected uptick in inflation potentially offering some support for the Euro.
However this may be offset by the release of Germany’s retail sales figures later in the week as economists forecast that sales growth will have reversed sharply in February, plummeting from 3.3% to -0.9%.