GBP EUR Exchange Rate Steady after High Court 'Brexit' Bounce

November 4, 2016 - Written by David Woodsmith

STORY LINK GBP EUR Exchange Rate Steady after High Court 'Brexit' Bounce

The GBP EUR exchange rate has traded relatively flatly this morning after a major spike yesterday caused the Pound (GBP) to jump to its highest levels since the Sterling flash crash a month ago.

Pound Euro (GBP EUR) Exchange Rate Up on High Court Ruling on 'Brexit'

A High Court ruling that the UK government would not be able to trigger Article 50 of the Lisbon Treaty without first voting on it in parliament caused the Pound Euro (EUR) exchange rate to jump by nearly two cents yesterday.

Market sentiment towards Sterling was markedly improved following the announcement as investors believe that this will help hinder the UK government’s attempts to pursue a ‘hard Brexit', which would likely see Britain lose access to the single market in exchange for tighter controls on immigration.

However the Pound did slide slightly overnight as the Government made it clear that it still planned to move forward with its plan to trigger 'Brexit' negotiations by March 2017 and that it would be challenging the decision in the Supreme Court by the end of the year.

Sterling Rallies after BoE Rate Decision

The Pound was also strengthened yesterday by the Bank of England’s (BoE) decision to leave interest rates unaltered following its latest rate meeting.

BoE Governor Mark Carney announced that the UK economy had performed better than expected following the Bank’s decision to lower rates to a record low of 0.25% immediately after the EU referendum.

Investor fears of additional quantitative easing were also quelled as the BoE announced that it did not currently plan to raise the level of quantitative easing past £435billion.

Paul Hollingsworth of the consultancy firm Capital Economics even went so far as to predict that the BoE may soon move to raise interest rates as he said;

‘Given that we think that the economy will surprise the MPC to the upside, and that inflation may be a bit stronger too, we think that the next move in interest rates will be up, and perhaps sooner than most expect.’

However Carney also warned that 2017 is likely to bring a sharp rise in inflation, which may affect consumer spending as wages struggle to keep up.

GBP EUR Exchange Rate Forecast: Euro to Slide on Disappointing PMI Figures

The GBP EUR exchange rate is likely to rise further later today as markets react to the lacklustre Eurozone PMI data released earlier this morning as Markit reported that the Eurozone composite PMI unexpectedly fell to 53.3 in October, after it was predicted to hold at 53.7.

Next week’s data calendar is unlikely to be as eventful as this week however as both currencies lack the catalyst of any major central bank news, and will likely rise and fall as in line with various manufacturing and retail data.

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