GBP EUR Exchange Slides as Brexit Bill is Published

January 27, 2017 - Written by Tim Boyer

STORY LINK GBP EUR Exchange Slides as Brexit Bill is Published

The GBP EUR exchange rate slid by around half a cent this morning following the publishing of the government’s bill to invoke Article 50.

Pound Euro (GBP EUR) Pressured as Government Schedules Brexit Bill

The recent rally in the Pound Euro (GBP EUR) exchange rate came to an end this morning as the Pound was weakened by the UK government’s plans to rush its Brexit legislation through parliament.

Markets had hoped that the vote would give the chance for opponents of the government’s ‘hard Brexit’ strategy to block the triggering of Article 50 until concessions were made, however plans to have the bill fast tracked through parliament may leave little opportunity for amendments.

Investors were also dismayed by Labour Leader Jeremy Corbyn’s plan to implement a three-line whip in order to ensure that his party backs the bill.

While it should not come as a total surprise to traders as Corbyn previously said that his party would not seek to ‘frustrate’ the Brexit process, it will be disappointing to those that had hoped he would show some sort of resistance due to the large number of Labour constituencies who backed remain.

Uptick in Italian Business Confidence Strengthens Euro

The Euro’s rise was also supported by an unexpected uptick in Italian Business Confidence earlier this morning.

The National Institute for Statistics (Istat) reported that business sentiment jumped from 103.7 to 104.8 in January, beating expectations that it would slide to 103.5 and reaching its highest level since October 2015.

The boost in confidence came as a surprise to most analysts who had forecast that the recent bailing out of the country’s third largest bank, Monte dei Paschi and the change in government late last year would negatively impact business outlook for 2017.

However Italian consumers did not share in this confidence, with the single currencies gains being trimmed somewhat by a drop in Consumer Sentiment over the same period as it fell from 110.9 to 108.8, plummeting past expectations that it would only slide to 110.6.

GBP EUR Exchange Rate Forecast: German Inflation Data Ahead

With no more data scheduled for release for the remainder of the trading session, investors are likely to focus on next week’s data to gauge movement in the GBP EUR exchange rate.

The first notable ecostat is set to be Germany’s latest Consumer Price Index, which is likely to strengthen the Euro if it continues to trend higher on Monday.

Meanwhile the UK’s consumer confidence report could hamper the Pound if it disappoints in January as some experts predict.

The Bank of England (BoE) will also meet towards the end of the week for its latest policy meeting. While economists do not expect the Bank to deviate from its current position on the UK’s ultra-low interest rate, investors hope that the recent rise in inflation may prompt BoE Governor Mark Carney to offer a more hawkish outlook for 2017.

Current Interbank Exchange Rates

At the time of writing the GBP EUR exchange rate was trending around 1.17 and the EUR GBP exchange rate was trending around 0.85.

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