Pound Euro Exchange Rate Lacks Direction Ahead of Vote on Withdrawal Agreement Bill

GBP/EUR Exchange Rate Flat as Crucial Vote Looms

The Pound to Euro (GBP/EUR) exchange rate is currently trading in a narrow range this morning as markets brace for a vote on Brexit Withdrawal Agreement Bill later this evening.

At the time of writing the GBP/EUR exchange rate is trading at around €1.1615, virtually unchanged from this morning’s opening levels.

Pound (GBP) Muted Ahead of Vote on Brexit Legislation

The Pound (GBP) is rangebound this morning ahead of a key parliamentary Brexit vote scheduled for 18:00 GMT.

Following Speaker John Bercow’s refusal to allow for a redo of the ‘meaningful vote’ on Boris Johnson’s Brexit deal, the government is pressing ahead with the introduction of its Withdrawal Agreement Bill (WAB) today.

Published yesterday evening, the bill outlines the legislation that the UK needs to pass to allow it to leave the EU.

Johnson is hoping to rush the bill through parliament in just three days to allow him to fulfil his commitment to leaving the EU by 31 October.

Today’s vote will be on the general principle of the bill, which observers suggest should pass to allow it to be amended by MPs later in the week

Two proposed amendments are likely to be of particular interest to GBP investors, both the provision for a confirmatory referendum as well as ensuring a no-deal Brexit is ruled out in 2020 if the UK and EU are unable to agree on a future trade agreement.

Euro (EUR) Undermined by Gloomy Eurozone Outlook

At the same time, the Euro (EUR) is struggling to find momentum this morning as a deteriorating outlook in the Eurozone continues to limit the appeal of the single currency.

Eurozone data has grown increasingly gloomy in recent months, sparking concerns over the bloc’s economic health.

Markets are particularly concerned by Germany, which looks on track to enter a technical recession this year.

These fears are shared by the Bundesbank, with Germany’s central bank warning in its monthly report yesterday:

‘Germany’s economic output could have shrunk again slightly in the third quarter of 2019.

‘The decisive factor here is the continued downturn in the export-oriented industry.’

GBP/EUR Exchange Rate Forecast: Focus to Remain on Brexit

Looking ahead, the outcome of this evening’s WAB vote will be key in determining the direction of the Pound to Euro (GBP/EUR) exchange rate this week.

Assuming the vote passes, then Sterling should find at least some short-term support, with any additional movement coming as MP’s table amendments ahead of a vote on scheduling taking place later in the week.

Meanwhile the focus for EUR investors tomorrow will be on the latest Eurozone consumer confidence figures, where a drop in household sentiment this month may put some pressure on the Euro.

This comes ahead of the European Central Bank’s (ECB) rate decision on Thursday, which EUR investors will be looking at closely for any signals that the bank could be plotting the introduction of more stimulus measures.

Matthew Andrews

Contact Matthew Andrews