EUR/GBP Exchange Rate Rises as May Forced to Ask for Shorter Brexit Extension
The Euro Pound (EUR/GBP) exchange rate rose today and is currently trading around £0.8569 on the inter-bank market.
Sterling (GBP) has weakened against the Euro (EUR) as Prime Minister Theresa May has been forced by pro-Brexit MPs to reduce the Brexit delay to less than three months, which has left many Pound traders concerned on a heightened possibility of a no-deal Brexit.
Michel Barnier, the EU’s Chief Brexit Negotiator, has further stoked fears, saying:
‘At this stage we have not received an – already famous in the press – letter to President Tusk and we have not received the request from the UK for the extension of the period under article 50 in any other form.’
The Euro, meanwhile, has gained on the weakened Pound today despite weaker-than-expected German PPI figures for February, which fell to -0.1% against the expected 0.2%.
The year-on-year German PPI figures, however, held steady at 2.6%.
Political controversy surrounding Hungary’s criticism of the EU’s policies is causing some EUR traders to remain cautious today, as the European People’s Party will decide on whether to expel the Hungarian President Viktor Orban’s party, Fidesz.
With cohesion within the EU of particular concern with the on-going Brexit crisis and following the recent protests in Paris, this has tended to weigh on sentiment in the single currency today.
GBP/EUR Exchange Rate Falls Despite Better-Than-Expected UK CPI Figures
The Pound failed to gain following the better-than-expected year-on-year UK CPI figures for February today, which increased to 1.9% against January’s 1.8%.
These were followed by the release of the UK Retail Price Index figures for February, which increased as expected to 0.7%, increasing against January’s disappointing -0.9%. However, today’s economic data releases have left the Pound relatively unaffected, as Brexit news has dominated the spotlight.
Sterling traders are feeling jittery following comments from the President of the European Commission, Jean-Claude Juncker, who said:
‘My impression is … that this week at the European council there will be no decision, but that we will probably have to meet again next week. Mrs May doesn’t have agreement to anything, either in her cabinet or in parliament.’
GBP/EUR Forecast: Sterling Could Rise on Brexit Compromise
Pound traders will be looking ahead to the Bank of England’s interest rate decision tomorrow, which is expected to hold steady at 0.75%.
These will be followed by the BoE’s meeting minutes, and with any indications that the UK is likely to suffer due to a delay to Brexit, or a possible no-deal situation, this could see the Pound fall further against the Euro.
Tomorrow will also see the publication of the UK’s retail sales figures for February, which, however, are expected to decrease.
Euro investors will be paying close attention to the European Council Meeting tomorrow, and with Brexit and other topics in the spotlight, this could see the single currency fall on any indications of a struggling Eurozone economy.
The GBP/EUR exchange rate, however, will remain dictated by political developments over the next coming days, and with any signs from the EU of a compromise on Brexit this could prove Pound-positive.