Euro Pound (EUR/GBP) Exchange Rate Sinks Ahead of Vote on No Deal Brexit

March 13, 2019 – Written by John Cameron

EUR/GBP Exchange Rate Sinks on Brexit Extension Hopes

The Euro Pound (EUR/GBP) exchange rate is down by 0.5% today and is trading around €0.8597 on the inter-bank market.

Sterling (GBP) recovered today following last night’s vote on Prime Minister Theresa May’s Brexit deal which lost by a majority of 149. This has opened up today’s vote on a possible no-deal Brexit, which is likely to be voted down in favour of an extension to Article 50.

Pound traders have been buoyed by comments by Angela Merkel, the Chancellor of Germany, in which stated recently that it would be ‘easy’ for the UK to secure a delay to the Brexit process until 30 June.

Today, meanwhile, will see the Spring Statement which will be headed by Philip Hammond, the Chancellor of the Exchequer, although this is likely to be overshadowed by Brexit developments, with just 17 days to go until the 29 March leaving date.

The Euro, meanwhile, has fallen against the strengthened Pound today despite the improvement of the Eurozone industrial production figures for January, which exceeded expectations at 1.4% – a significant improvement on December’s -0.9%.

EUR/GBP Exchange Rate Falls as Spanish CPI Figures Hold Steady

Today also saw the publication of the Spanish CPI figures for February which held steady at 0.2%.

Many Euro investors will be paying attention to the speech by the European Central Bank’s Benoît Cœuré, a member of the executive board, today, and with any dovish comments about the state of the Eurozone’s this could prove Euro-negative.

EUR traders will be watching Brexit developments closely today, following comments from Michel Barnier, the EU’s Chief Brexit Negotiator, indicated that the likelihood of a no-deal has, he says, ‘never been higher’.

Barnier warned of possible preparations for a Brexit no-deal today, saying:

‘We are at a critical point. The risk of no deal has never been higher. We are ready for this, we are preparing for this, it is not a scenario we want.’

GBP/EUR Exchange Rate Rises despite Tory MPs Threatening to Resign

There have been reports that some Tory MPs could resign if the Malthouse Compromise amendment is not given a fair vote, which has put Theresa May under further pressure today and clipped some of the Pound’s gains.

Barnier, however, has called the compromise a ‘dangerous illusion’, saying that leaving the EU without an agreement would be entirely unsatisfactory and without benefit to the UK.

Many Pound traders, however, are focusing on the no-deal vote today, and with any signs of a possible rebellion within the Conservative party, this could see the Pound begin to fall against many of its competitors.

EUR/GBP Forecast: Sterling Could Rise on an Extended Brexit

Euro traders will be looking ahead to the publication of the German Harmonized Index of Consumer Prices figures for February tomorrow, which are expected to hold steady at 1.7%.

Tomorrow will also see the publication of the French EU normalized CPI figures for February, and with any signs of an improvement this could provide some uplift for the single currency.

Pound traders, however, will be awaiting the outcome of today’s vote on a no-deal Brexit, however, with this likely to be voted down, tomorrow will see a vote on an extension to Article 50, which will determine the course of the UK’s relationship with the EU.

The EUR/GPB exchange rate will remain sensitive to Brexit development over the next couple of days, and with any signs of a breakthrough – or an extension of the Brexit process – we could see Sterling rise once again.

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Euro Forecasts Euro Pound Forecasts Pound Euro Forecasts