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GBP EUR Exchange Rate Slumps on Article 50 Bill Debate, Gloomy IFS Forecast

February 7, 2017 - Written by Frank Davies

The British Pound to Euro exchange rate flattened on Wednesday afternoon as the Pound’s bullishness from Tuesday afternoon faded and the Euro strengthened due to a weaker US Dollar.

Sterling also slipped due to expectations that MPs would vote to pass the Article 50 bill through to the House of Lords on Wednesday evening. The increasingly imminent Brexit process left traders jittery.

[Previously updated 08/02/2017]

With the matter of the Greek bailout firmly back in the spotlight the GBP EUR exchange rate has been encouraged to trend higher, with signs mounting that the IMF could withdraw its support for the program.

Confidence in the Pound has been somewhat limited, however, as the government’s Article 50 bill looks set to pass without amendment, giving the government freer reign over its Brexit negotiations.

[Previously updated 07/02/2017]

GBP Demand Remains Soft with Commons Debates in Focus



Sterling has fared poorly against the Euro today, having repeatedly fallen into a negative range on account of a Commons debate on the Article 50 bill. This debate has seen a Labour amendment for regular Brexit updates blocked, although the concession of both Houses of Parliament voting on the final bill has been granted.

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Elsewhere, the Institute for Fiscal Studies (IFS) has issued a pessimistic forecast for the UK up to 2020, estimating that tax hikes and funding cuts are imminent but may not be enough to eliminate the gaping budget deficit by the time of the next election.

GBP EUR Exchange Rate Forecast to Worsen if Commons Approve Bill in Third Reading



With the next solid UK data releases not due until the coming Friday, the Pound is next expected to be moved by the progress of the Article 50 bill through the House of Commons.

Having passed a preliminary vote and with the amendment stage nearing its end, the next stage will be the third reading, which is largely expected to result in a majority approval vote.

Despite this outcome being priced in, the Pound is still expected to slump on the news, given that it will represent yet another clear step towards Brexit in its entirety.

The most notable ecostat out on Friday will be the December trade balance, which previously showed a deficit figure of -4.17bn.

EUR GBP Exchange Rate Tight as Greek Debt Crisis Returns to Unnerve Investors



With Euro investors mainly focusing on Greece today, the single currency has slumped against the Pound due to recurrent fears about the Greek debt crisis.

The International Monetary Fund (IMF) released a statement highlighting divisions over lenient or strict debt repayment attitudes and the situation remains a tense one that is likely to limit Euro demand for the near-term at least.

Eurozone news has done little to reduce any concerns about Greece’s struggling economy, with the December trade balance figure showing a deficit expansion from -1.555bn to -1.566bn.

Future EUR Demand Linked to Incoming German Central Banker Speech, Trade Balance Stats



The next news to watch out for from the Eurozone is due this afternoon, consisting of a late speech from Bundesbank President Jens Weidmann.

Germany will remain a key influencer of the Euro Pound exchange rate for the rest of the week as well, with Thursday bringing the nation's December trade balance result; this previously posted a surplus above 22bn.

Also notable on Thursday morning will be Greek industrial production and unemployment rate stats for December and November respectively, which could provide some indication of how Greece is set up to handle future rulings by its creditors.
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