November 22, 2018 - Written by John Cameron
STORY LINK Euro to Pound Exchange Rate Plummets Following Post-Brexit Agreement
EUR/GBP Slumps Following the Release of ‘Fig Leaf’ Relations Agreement
The Euro Pound Sterling (EUR/GBP) exchange rate plummeted this morning to an interbank rate of £0.8849 following the news of a draft political declaration outlining future UK-EU relations post-Brexit.
In a brief statement in Downing Street, Prime Minister Theresa May called the EU draft agreement on post-Brexit relations ‘right for the whole of the UK’.
It is said that British ‘red lines’ on fishing have been protected, with a government source saying that the EU wanted ‘existing reciprocal access to fishing waters and resources [to] be maintained’ but this had been rejected.
However, not all the responses to this news have been positive, with Tory MP Mark Francois describing it as a ‘fig leaf’ that was not legally binding and ’26 pages of political camouflage designed to take people’s eye off the withdrawal agreement and try to persuade them to vote it through.’ Despite this, the Euro continues to slump against Sterling.
Further aiding the UK currency’s gains, the European Commission released their consumer confidence figures for November, which revealed a lower-than-expected drop to -3.9 rather than the predicted -3, from a previous -2.7.
EUR/GBP Exchange Rate Slumps despite Hawkish ECB
The European Central Bank (ECB) Monetary Policy Meeting Accounts have also been released today, with rate-setters acknowledging recent disappointing economic data, but taking the view that there was widespread economic growth and accelerating inflation.
The notes state:
‘Incoming data, while somewhat weaker than expected, remained overall consistent with the baseline scenario of an ongoing broad-based economic expansion, supported by domestic demand and continued improvements in the labour market.’
Reuters noted that policymakers stressed they needed to reaffirm plans to dial back monetary stimulus even though some saw growing risks to the economy.
The ECB kept its rates at record lows at the meeting, and repeated its intention to stop adding to its €2.6 trillion pile of bonds by the end of this year.
EUR/GBP Exchange Rate Buoyed Over UK-Brussels Meeting
The Euro Pound (EUR/GBP) exchange rate soared over the course of Tuesday and Wednesday as UK Prime Minister Theresa May headed to Brussels to meet with Jean-Claude Juncker, the European Commission President.
Despite May speaking of the meeting as a success, calling it a ‘very good meeting’ and saying that progress had been made, the UK currency still struggled to bite back against the single currency.
The meeting ignited optimism despite the ongoing issue of Gibraltar, as Spanish Prime Minister, Pedro Sánchez stated that any decisions involving the British overseas territory must be agreed upon bilaterally between Spain and the UK, or else they will vote against the Brexit deal.
EUR/GBP Exchange Rate could Remain Volatile Potential as Brexit Anxieties Continue
Looking towards of the end of this week’s session, Theresa May is to head back to Brussels on Saturday to continue talks with Juncker, and an agreement will be attempted with Spain over Gibraltar.
May has stated that she is ‘confident that on Sunday we will be able to agree a deal for the whole of the United Kingdom family including Gibraltar.’
As for the Euro, data releases tomorrow of Markit PMIs for November could cause the currency to make gains against the Pound (EUR/GBP) if they are revealed to be positive.
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TAGS: Euro Pound Forecasts