Calm before the storm? Pound/Euro exchange rates


Pound/Euro exchange rates are trading steadily this morning ahead of the key Brexit vote in parliament tomorrow. There are a number of potential outcomes from this, as explored by my colleague Alastair in detail last week, and for this reason it is almost impossible to predict the next direction for the pound. One thing that is almost certain is there will be plenty of market volatility.

Most people expect Prime Minister Theresa May’s Brexit deal to be voted down and it will therefore be the outcome following this that will determine the next move for the pound. I firmly believe a situation of ‘no deal’ Brexit will be avoided at all cost and an alternative path will be found. Sterling exchange rates rallied on Friday afternoon on rumours the Article 50 deadline of the 29th March will be extended by 6 months.

Where now for Pound/Euro exchange rates?

Once again the path of Brexit is extremely unclear, there was even an article in the Sunday Times over the weekend suggesting a potential coup should Theresa May lose the vote and allowing MP’s to put Brexit on hold, potentially leaving the way for a second referendum.

For me, the fact that the pound/euro exchange rate hasn’t already significantly crashed, suggests there is something bubbling away in the back ground to prevent a ‘no deal’ occurring. I believe the most likely solution, will be an extension of the Article 50 deadline, and it would seem the EU are already expecting this. Should this occur, then I think some support will be seen for the pound and we could see sterling rally later this week.

Protect yourself against adverse exchange rate movements

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