The EUR GBP exchange rate plummeted from the two-week high it struck overnight as the official start to Brexit caused chaos for investors today.
The Pound plummeted yesterday evening as Prime Minister Theresa May officially began the formal process to withdraw the UK from the EU today as she signed a letter, triggering Article 50 of the Lisbon Treaty.
In a statement to Parliament Theresa May said;
‘Today the government acts on the democratic will of the British people and it acts too on the clear and convincing position of this House. The Article 50 process is now under way and in accordance with the wishes of the British People the United Kingdom is leaving the European Union.’
While talks are not expected to begin in full until after the French elections in May, the official start to the two year negotiation period has caused a great deal of market volatility as it will be the first time that Article 50 has been triggered.
However EUR GBP retreated somewhat during the day as investors reflected on their kneejerk reaction to sell the Pound as there are also worries that the Eurozone will also suffer without easy access to UK consumers.
A report by the Association of German Chambers of Commerce and Industry (DIHK) in Germany suggests that Brexit will ‘seriously harm’ German businesses.
Of the 2,200 companies surveyed 40% of those who responded believed that they would do less business with the UK over the coming months, with concerns that investment will also weaken.
With Britain being Germany’s third largest export market, worth over €86bn a year to German business, investors see the loss of free movement of goods as a major blow to the Eurozone economy as well.
Looking ahead the EUR GBP exchange rate is likely to continue to be marred by the uncertainty of Brexit over the coming days with markets in constant flux as they react to the latest reports from those involved in the process.
On the data front the Pound will likely weaken on Thursday as Gfk’s Consumer Confidence figures are expected to show that household sentiment fell from -6 to -7 in March as consumers face inflation and weak wage growth.
Meanwhile the Euro may climb again tomorrow morning as economists predict that Eurozone Business Confidence will see a rise from 0.82 to 0.9 following the defeat of Geert Wilders in the Dutch elections earlier this month.
Current Interbank Exchange Rates
At the time of writing the EUR GBP exchange rate was trending around 0.86 and the GBP EUR exchange rate was trending around 1.15.