Currency Forecasts

Pound/Euro hits €1.18 after ‘No Deal’ rejected

As you can see from the graph below, the Pound has surged higher after this evenings Parliamentary votes against leaving the EU without a deal: Pound/Euro hits €1.18:

GBP/EUR 13th March 2019

Sterling has seen its biggest one day rise of the year so far. GBP/EUR hit €1.18 while GBP/USD reached $1.34, the highest we’ve seen the Pound for some time.

Why has the Pound gone up?

We had expected a vote to reject No Deal on the 29th March, however an amendment by Labour’s Yvette Cooper rejecting a no-deal Brexit “under any circumstances” was won, by a very small margin of just 4 votes, ahead of the governments motion that also won by 374 to 164 . This shows that there is a majority to rule out leaving without a deal.

This means a delay is now almost inevitable and will be voted on tomorrow evening. This opens the door to many options. Some think that a softer Brexit could be on the cards. Others, that a second referendum may happen. Most likely, May’s deal could now be passed if there is a small delay in order to get it agreed. Whichever way you look at it, No Deal is now unlikely, and the Pound has risen as a result. There remains much uncertainty, and given the Pound has risen so much, the rally could soon run out of steam.

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Pound remains supported amid Brexit uncertainty

As I’m sure our readers will know, Parliament voted against Theresa May’s Brexit deal. This was not a surprise as the day went on yesterday, it became clear that the DUP and ERG would not vote through the deal.

Tuesday morning starting with optimism that a deal could be agreed. Theresa May came back with the amendments many thought would be enough to vote through the deal. Indeed many ardent Brexit supporters had indicated they would support the deal, and this optimism caused the Pound to rise. At one point GBP/EUR exchange rates were approaching €1.18 which is the highest we have seen in 2 years. However the gains were not to last.

May’s deal torpedoed by Attorney General, Sterling falls

Things started to unravel when it became clear that the Attorney General Geoffrey Cox would not change his legal advice that the UK could be trapped in the ‘Backstop’. It’s not surprising given that he has been a Barrister for 36 years, and a senior politician for less than a year. He has stated that his reputation as a barrister is more important to him that his reputation as a politician, and legally speaking he had to conclude that his legal opinion remained unchanged. As such, as it became clear the vote would not pass, the Pound fell accordingly. GBP/EUR dropped to €1.1550 before recovering slightly.

Why hasn’t the Pound fallen further?

Pound remains supported – The assumption was that the Pound would fall, however as this had been priced in throughout the day, it was largely unchanged when the vote was passed. Today, the Pound has recovered to €1.1650 vs the Euro and $1.32 vs the US Dollar. The reason the Pound hasn’t fallen further, is that many still expect some deal to be agreed. That’s why the Pound remains supported

What next for Brexit and the Pound?

Tonight, MP’s will almost certainly vote against the UK leaving the EU without a deal. On Thursday, a vote will be held on whether to extend Article 50. It’s here that it gets interesting. It could well be that with No Deal ruled out and Brexit supporters feeling that an extension could risk the UK not leaving at all, a 3rd vote could be held as soon as Friday. Perhaps they will conclude that May’s deal is better than extending the process and risk Brexit not happening at all. This is the main reason that the Pound remains supported; No Deal is almost certainly going to be taken off the table this evening. And, as unlikely as it sounds, May’s deal could still get through.

If it doesn’t, then any extension could lead to a whole host of possibilities including May stepping down, revoking article 50, a general election, or another referendum. All of these would simply increase and extend the uncertainty and almost certainly send Sterling into a period of prolonged weakness. The most likely outcome, then, is May’s deal still getting through, sooner or later.

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Could we be close to a Brexit deal?

Sterling exchange rates have rallied overnight as it appears that concessions could be made between the UK and EU in the hope to get Prime Minister Theresa May’s deal through parliament.

MP’s will vote this evening on Mrs May’s Brexit deal after “legally binding” changes to it following last-minute talks with the EU in Strasbourg. Labour party members have already said they will vote it down and a number of Tory Brexiteers are taking legal advice on the changes.

What has the PM agreed?

Two key amendments have come from the PM’s meeting with EU officials. The first is a “joint legally binding instrument” on the withdrawal agreement which the UK could use should the EU try to keep the UK tied into the Irish backstop indefinitely. And the second is a joint statement about the UK and EU’s future relationship with a commitment to replace the backstop with an alternative by December 2020.

A key view on these amendments will be taken by Attorney General Geoffrey Cox this morning, reportedly around 11:30. His views could be an increasingly important factor as to how MP’s will vote in the commons later today. Many MP’s fear the backstop would keep the UK in a customs arrangement with the EU indefinitely and this is still very much the sticking point to get her vote passed.

Why has the pound rallied?

It would appear the market believes there is a real chance that Theresa May, with these concessions in place, could get her deal through parliament today. Key members of the EU have said this is the final deal. President of the European Commission Jean-Claude Juncker was quoted as saying:

“In politics sometimes you get a second chance. It is what we do with that second chance that counts. There will be no third chance.”

It really does appear as though this is a 50-50 vote, pass it or face a ‘no-deal’. I’m hopeful she will get this vote through and we may well see some further positive movement for the pound. We can but hope…….

Worried about Brexit affecting exchange rates?

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Pound rising as rumours swirl of Brexit deal

This afternoon, we have seen the Pound rising as rumours swirl of a Brexit deal. For weeks and weeks many have been saying that the EU leave things until the last possible minute before making concessions necessary to get a deal, and we’re hearing that might be exactly what will happen today.

We are hearing that PM May will head to Strasbourg today, and that Junker will be offering some kind of deal with regards to the Brexit Withdrawal Agreement.

Illustrating how quickly things can change both in politics and the currency markets, since this morning the Pound has strengthened by around 1% against the Euro and US Dollar. Rates are at €1.1630 and $1.31 respectively, recovering losses from last week.

Time will tell what kind of deal will be offered, and if whatever May comes back with will get voted through parliament tomorrow. If it does, expect further gains for the Pound. If it doesn’t, the scale of any defeat will dictate the amount the Pound could fall by.

We will publish more as we find out what’s happening. In the meantime, you can follow live real-time currency charts here. To talk to an expert about your currency needs, click here.

Pound falls ahead of Brexit vote

Good morning. The Pound has fallen this morning ahead of this week’s votes in Parliament on Theresa May’s Brexit deal. There were hopes that progress would be made this weekend in talks between the UK and EU, but it doesn’t look like that has been the case. It’s now looking like the deal will be voted down again, as it was in January.

Due to this, Sterling has given up much of the gains it had made against other currencies in recent weeks. GBP/EUR has dropped from €1.17 to €1.15. GBP/USD has dropped below $1.30.

What is happening with Brexit talks?

As there has, as yet, been no breakthrough in talks, the most likely outcome now is that the deal will be voted down. MP’s will then vote on whether to leave the EU with no deal, which is highly unlikely. That leaves us with a vote on whether to extend and delay Brexit. In doing so, the uncertainty that has been keeping the Pound weak of late would also be extended, which could lead to rates dropping further.

Of course there is still time for the EU to make the concessions on the back stop necessary to get the deal through. However, given that MPs have effectively already ruled out leaving without a deal, there is now little impetus or need for the EU to do anything.

Will Brexit be delayed, and how could this affect the Pound?

We therefore expect Brexit to be delayed by at least 2 or 3 months. How this would affect GBP exchange rates is hard to predict. On the one hand, it would extend uncertainty and do little more than kick the can down the road. A ‘No Deal’ would still be possible, and so this could weaken the Pound. On the other hand, it would greatly reduce chances of a ‘Hard Brexit’ so could limit any losses. Either way, in the absence of a deal being agreed, it’s unlikely the Pound will strengthen.

Worried about Brexit affecting exchange rates?

If you are worries about how Brexit talks are affecting exchange rates, then contact us today for a free consultation with one of our expert currency brokers. We can discuss your requirements, explain how our service works, and provide you a quote to see how much you could save by using our currency services.

Click here to make a free enquiry