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GBP EUR Exchange Rate Nears Four-Month High over 'Brexit' Comments

December 1, 2016 - Written by Ben Hughes

The GBP EUR exchange rate rallied just shy of a four-month high today following reports that the UK government may be willing to pay for continued access to the single market.

Pound Euro (GBP EUR) Jumps over Davis Remarks



The Pound Euro (GBP EUR) exchange rate was bolstered by comments from Brexit Secretary David Davis who indicated that the UK government may be willing make payments to the EU in order to retain access to the single market after 'Brexit'.

In replying to a question on whether the British government would be willing to make some sort of contribution to the EU to ensure access to the single market, Davis said;

‘The major criterion here is that we get the best possible access for goods and services to the European market - and if that is included in what you are talking about, then of course we will consider it.’

However the 'Brexit' Secretary was unwilling to detail what the government’s current plans were for the UK’s exit from the EU as he argued;

‘The probable success of the negotiations depend very greatly on us being able to manage the information and keep what needs to be secret until the last minute secret.’

The news caused a notable improvement in market sentiment towards GBP as investors previously feared that the government would be willing to give up all access to the single market in order to gain greater control over immigration.

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Euro (EUR) Weakened by Italian Concerns



Euro (EUR) exchange rates face renewed pressure over Sunday’s conditional referendum in Italy as current polls suggest that Prime Minister Matteo Renzi reforms will be rejected by voters.

Investors worry that this could lead to a new populist government as Renzi has repeatedly claimed that he will resign if the referendum is unsuccessful, with growing fears that the Eurosceptic Five Star Movement could potentially claim victory if a general election is called.

This has exacerbated concerns over the Italian economy as analysts warn that Renzi’s resignation could also cause setbacks for planned reforms to Italy’s banking sector, which may lead to a new banking crisis in Europe.

GBP EUR Exchange Rate Forecast: Supreme Court to Hear Government Appeal next Week



The GBP EUR exchange rate could potentially find itself sliding back next week however as the UK government goes to the Supreme Court in an attempt to appeal a High Court judgement in October that ruled that the government could not invoke Article 50 with a vote from parliament.

The Pound is likely to plummet if the Supreme Court rules in the government's favour as investors believe that a ‘soft Brexit' would be more likely if opposition MP’s were able to block the 'Brexit' process until the government made certain assurances about how it planned to exit the EU.

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