GBP EUR Exchange Rate Rallying after High Court ?Brexit? Ruling

Modified: Thursday, 3 November 2016 13:05 BST - Written by Frank Davies

STORY LINK GBP EUR Exchange Rate Rallying after High Court ?Brexit? Ruling

The GBP EUR exchange rate has spiked following a High Court judgement that the UK government will not be able to trigger Article 50 without a vote from the British parliament.

Pound Euro (GBP EUR) Exchange Rate Jumps as Parliament Gets ‘Brexit’ Vote

A High Court ruling that the UK government will not be able to proceed with ‘Brexit’ without the consent of the British parliament has caused the Pound (GBP) to skyrocket as markets reacted positively to the news. As Neil Wilson of ETX Capital explains;

‘The High Court ruling on Article 50 is a body blow for Theresa May and the Brexit-leaning ministers at the heart of government. It’s made triggering Brexit a lot trickier and has given Sterling a massive shot in the arm.’

The ruling will help to allay worries that the UK government would be able to invoke article 50 of the Lisbon Treaty unopposed, especially as the government is perceived to be pursuing a ‘hard Brexit'.

Rhetoric from certain members of the UK government, that Britain would prioritise stronger immigration controls over retaining access to the single market, had pressured the Pound in recent weeks as investor fears were stoked by the uncertainty of what impact this would have on British businesses.

However investors are likely to remain dovish for now as the government plans to challenge the ruling in the Supreme Court, which could still allow for the government to trigger Article 50 on its own terms.

Euro (EUR) Bludgeoned by BoE Rate Decision

The Euro (EUR) was also battered by the news that the Bank of England (BoE) had voted to leave interest rates on hold, as they sit at an all-time low of 0.25%.

The BoE admitted that the British economy had performed better than expected since the UK’s vote to leave the EU and that further cuts were unnecessary at this time. However the BoE did warn that British inflation could spike to nearly 3% in the next couple of years as the UK negotiates its split from the EU.

The BoE also made the decision not to increase its quantitative easing programme, leaving it unchanged at £425billion, which helped to further boost Sterling.

GBP EUR Exchange Rate Forecast: Pound May Slide by the End of the Week

The double whammy of positive news for the Pound has helped the GBP EUR exchange rate reach its highest point since the Sterling flash crash at the beginning of October, however with no more domestic data releases left for the week, the Pound could fall if market sentiment drops.

Meanwhile the Euro could easily gain tomorrow if there is a notable improvement in the slew of Eurozone PMI data set to be release. Forecasts currently indicate that most of October’s PMIs will remain unchanged from the month before, but an unexpected rise could cause the Euro to rally.

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