British Pound to Euro Exchange Rate: 'Brexit? Tensions in UK Government

October 17, 2016 - Written by David Woodsmith

STORY LINK British Pound to Euro Exchange Rate: 'Brexit? Tensions in UK Government

Pound Sterling (GBP) Exchange Rates Fluctuate over Cabinet Dispute on ‘Brexit’

A report from the Daily Telegraph has indicated that there may be tensions at the very top of the UK government as chancellor Philip Hammond has been accused of attempting to ‘undermine Brexit’ by pushing for delays to immigration policy.

His cabinet peers have supposedly complained that Hammond is ‘arguing like an accountant’ as he pushes for the UK to retain access to the single market post-‘Brexit’, while claiming that his is ‘overly influenced by his Treasury officials who think it is a catastrophe that Britain voted to leave the EU’.

Downing Street has been quick to deny rumours that the split could see Hammond quit as Chancellor while insisting that the Prime Minister Theresa May has ‘full confidence’ in him. This has done little to alleviate the worries of investors however with the Pound trading around half a cent lower at the time of writing.

Weak Pound May Pave Way for US Takeovers

The Pound was also weakened as Liberty Global Plc Chairman John Malone warned that the low value of the Pound could spur a number of US companies to take over UK businesses. Speaking to Bloomberg he said;

‘Some U.K. companies really look cheap to a U.S. Dollar investor, I wouldn’t be surprised to see a lot of M&A activity by U.S. private equity or corporates when they think that the pound has kind of bottomed.’

The news is unlikely to help current market sentiment towards the Pound as investors worry about the uncertainty surrounding UK businesses in the wake of ‘Brexit’.

Euro (EUR) Exchange Rates Bolstered by Consumer Price Index Growth

The Pound Euro (GBP EUR) exchange rate was further dented by the release of September’s Eurozone consumer price index, which matched predicted growth from 0.1% to 0.4%, continuing the recent recovery after it plummeted in July following the UK’s vote to leave the EU.

The UK’s Rightmove house price report also grew from 0.7% to 0.9% in October causing a small spike in the exchange rate earlier this morning but the Pound was unable to capitalise on it and quickly fell again.

GBP to EUR Exchange Rate Forecast: Pound May Rise on Positive Domestic Data

The GBP EUR exchange rate may rise on Tuesday with the release of the UK’s consumer price index report which is forecast to rise to 0.9% for the month of September, hopefully providing the Pound some respite against the Euro.

Meanwhile the Euro may gain following the European Central Bank meeting on Thursday as some analysts predict will see the ECB announce an early end to its quantitative easing programme.

Current Interbank Exchange Rates

At the time of writing the GBP/EUR exchange rate is currently around the 1.11193 level.

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