GBP EUR Exchange Rallies as PM Outlines 'Brexit' Plans

January 17, 2017 - Written by Ben Hughes

STORY LINK GBP EUR Exchange Rallies as PM Outlines 'Brexit' Plans

The British Pound to Euro exchange rate continued to trend over half a cent below the day’s opening levels towards the end of Wednesday’s session, but was able to limit its losses after a date for the Supreme Court’s Article 50 case decision was announced.

UK Supreme Court will announce whether it will side with the High Court or UK government on the activation of Article 50 on the 24th of January. Investors expect the High Court’s decision will be upheld, which would bolster Sterling on Tuesday.

[Previously Updated 17/01/2017]

The GBP EUR exchange rate jumped by nearly two cents this afternoon following Prime Minister Theresa May's speech outlining her plans for leaving the EU.

Theresa May’s Speech Provides Boost for Pound Euro (GBP EUR)

The Pound Euro (GBP EUR) exchange rate spiked this afternoon as investor 'Brexit' uncertainty was alleviated by Theresa May’s speech.

The PM confirmed what had been widely predicted for months, that the UK government would not be seeking access to the single market as she said, ‘what I am proposing cannot mean membership of the single market’.

However she confirmed that she would be seeking to retain the customs union and that she would pursue the creation of a new free trade agreement with the EU while allowing the UK to form its own trade agreements with other countries, saying;
‘It should give British companies the maximum possible freedom to trade with and operate within European markets and let European businesses do the same in Britain.’

May also promised that MPs would get to vote on the final terms of 'Brexit' in parliament, although was clear to point out that it would not be a vote on whether or not 'Brexit' should be pursued.

While there are still a few lingering doubts over some of the intricacies of 'Brexit', the speech helped to clear a lot of the uncertainty that had hung over the Pound since the vote to leave the EU in June, and gave a clear direction on how negotiations will go once Article 50 is triggered later this year.

'Brexit' Speech Prevents Euro Uptick form ZEW Survey

The Euro’s losses this afternoon came despite a jump in the latest ZEW Survey on the Current Situation in Germany.

The short term indicator surged from 63.5 to 77.3 in January, sailing past expectation it would show a modest rise to 65 as recent data showed that the German economy had recovered from its slump in October.

The mid-long term Economic Sentiment Index also showed improvement, rising from 13.8 to 16.6 over the same period, but fell short of predictions it would rise to 18.3 as economist remained concerned that the recent problems in Greece and Italy could impact Germany’s economy in the future.

GBP EUR Exchange Rate Forecast: UK Employment Data Ahead

The GBP EUR exchange rate may advance further tomorrow if the latest employment figures so an improvement. While the Unemployment rate is expected to have held steady at 4.8% in November, the recent uplift in UK economic data could indicate that the UK job market grew faster than expected towards the end of 2016.

Meanwhile the Euro may struggle to recover following the release of Germany’s latest Consumer Price Index, which is forecast to show that German inflation held at 1.7% in December despite an uptick in Germany’s economy in November.

Current Interbank Exchange Rates

At the time of writing the GBP EUR exchange rate was trending around 1.15 and the EUR GBP exchange rate was trending around 0.86.

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