The GBP/EUR exchange rate rocketed higher this week, as a turbulent week in UK politics saw no-deal Brexit fears fade as Boris Johnson’s government suffered a number of setbacks in Parliament.
Pound Surges as No-Deal Brexit Fears Fade
After an initial wobble, which saw GBP/EUR tumble below €1.10 in the first part of the week, the Pound spent the rest of the week soaring higher on the back of renewed Brexit optimism.
This came as Parliament backed a bill to delay the Brexit deadline for a third time, whilst also rejecting Boris Johnson’s call for a general election.
These key defeats for PM as well as the shock resignation of his Brother Jo Johnson and the loss of his majority in parliament have created considerable headaches the government, but have been viewed as GBP positive by markets.
However, things looked less cheery on the data front, as the UK’s latest PMI figures came in below expectations, renewing concerns over the health of the UK economy.
For EUR investors the focus this week has been on Germany as the country’s latest industrial data has stoked concerns the Eurozone’s latest economy could be headed towards a recession in the third quarter.
Is there Room for Sterling to Extend its Gains as Politics Remain in Focus?
Looking ahead to next week, it seems likely that UK politics will continue to act as the main catalyst of movement in the GBP/EUR exchange rate.
Johnson has tabled another motion calling for a general election, which will be debated by Parliament on Monday.
This may see the Pound extend its recent gains if the motion fails again as is expected.
In terms of data, the publication of the UK’s latest employment data could also offer some support to Sterling if domestic wage growth remains solid.
For EUR investors the focus next week will be on the European Central Bank’s (ECB) latest policy meeting.
The bank has signalled that it will deliver a ‘substantial’ stimulus package this month and markets will be eager to learn more about what this may include.
As a result we could see some significant volatility in the Euro, depending on how dovish the ECB’s stimulus proves to be.
If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.
