Update: GBP/EUR Exchange Rises, UK-EU Strike Deal while UK Markets Await for DUP Backing
The Pound Euro (GBP/EUR) exchange rose to around €1.162 after the President of the European Commission, Jean-Claude Juncker, confirmed that there was now a UK-EU consensus on a Brexit deal.
Mr Juncker said:
‘It’s a fair and balanced agreement for the EU and the UK and it is testament to our commitment to find solutions. I recommend that #EUCO endorses this deal.’
Boosting confidence in a Brexit deal ahead of the October 31 deadline, the EU’s declaration of a deal boosted the GBP/EUR exchange rate today.
However, with the Democratic Unionist Party (DUP) remaining sceptical over Boris Johnson’s proposal, UK markets are becoming increasingly cautious, as this may threaten the withdrawal agreement passing successfully through Parliament.
GBP/EUR Exchange Rate Eases, Doubts Increase over PM’s Brexit Deal
The Pound Euro (GBP/EUR) exchange rate eased this morning, with the pairing currently trading around €1.154 after the Democratic Unionist Party (DUP) dealt a blow to Prime Minister Boris Johnson’s Brexit deal. The DUP refuse to ratify the PM’s proposal while they perceive issues over customs, Stormont consent and “a lack of clarity on VAT”.
— DUP (@duponline) October 17, 2019
Undermining previous hopes that a deal might finally be in the offing, the DUP position saw the GBP/EUR exchange rate ease today. With a rare House of Commons vote scheduled for Saturday, support from the ten DUP MPs would be crucial in seeing the deal pass through parliament.
The DUP’s refusal to endorse Boris Johnson’s proposal just hours before today’s European Council Summit means a UK-EU deal is less likely to succeed, leaving markets jittery and the pound struggling.
However, with European leaders expected to approve the Prime Minister’s Brexit deal this afternoon, we could see Sterling rise.
In UK economic news, today saw the release of September’s retail sales figure, which beat forecasts, rising from -0.3% to 0.2%. However with Brexit news dominating market movement, ecostats are unlikely to have much of an effect on GBP exchange rates.
EUR/GBP Exchange Rate Improves, Focus Shifts to the European Council Summit
The Euro (EUR) rose against the Pound (GBP) today as the focus turned to the EU Council meeting at Brussels. European markets are hopeful the UK and the EU will reach a consensus on a workable Brexit deal, with details announced at the summit.
European Central Bank (ECB) policymakers will step into the summit spotlight as they offer their outlook on the Eurozone economy. Any dovish comments could potentially clip Euro gains.
Analysts at investment firm Unigesstion were upbeat about a Eurozone recovery:
‘The Eurozone has been a source of concern to us for 20 consecutive months in light of alarming signs of broad-based deceleration. But things seem to be changing… With the ECB’s new President [Christine Lagarde] pushing for more fiscal spending, an extremely low Euro and a lower exposure to the trade war, we think European growth assets could become more appealing.’
GBP/EUR Outlook: Could Sterling Rise on Tory-DUP Brexit Compromise?
Pound traders will stay locked on Brexit news, with all eyes on emerging headlines. Any sign of a Brexit breakthrough in the form of a DUP compromise or EU endorsement of Boris Johnson’s deal is likely to see the Pound rise.