The Pound has risen to €1.12 against the Euro, and above $1.24 vs the US Dollar this morning, after a high court ruling that Parliament must vote on whether the UK can trigger article 50. It’s expected that the government will appeal the decision to the Supreme Court. Here’s how GBP/EUR has moved this morning.
I’m surprised the Pound has reacted in this way to be honest. It’s likely that even if the government lose their appeal, most MPs will vote to trigger article 50, so it doesn’t really change much. However, what it might do is delay when article 50 is triggered, due to parliamentary hurdles and red tape. In my view therefore, all this will do is create even more uncertainty rather than just getting on with it. I think that this spike will be short lived when investors realise this doesn’t mean that ‘Brexit’ isn’t going to happen, and all it really means is there may be further delays and uncertainty, which of course isn’t likely to help the Pound.
Later this afternoon, we have ‘Super Thursday’ from the Bank of England, in which we will see the Quarterly inflation report, a decision on interest rates, and a speech by governor Mark Carney. Rates are likely to be left on hold, and Carney is not likely to talk up the Pound. Those buying Euros may therefore wish to take advantage of the spike in rates we’ve seen as it may well prove to be short lived.
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