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Pound Sterling to Euro Exchange Rates Rebound on Hopes of Amendment to Block ‘No-Deal Brexit’

Pound to Euro Exchange Rate Edges Away from Weekly Lows on Brexit Hopes

After tumbling for most of the week so far, the Pound Sterling to Euro (GBP/EUR) exchange rate edged slightly higher on Friday morning amid signs that UK MPs would push efforts to avert the chances of a worst-case scenario ‘no-deal Brexit’.

GBP/EUR opened this week at the level of 1.1133 and slipped throughout the week, touching on a weekly low of 1.1046 on Thursday night.

While GBP/EUR rebounded slightly from those lows and trended near the level of 1.1064 at the time of writing on Friday morning, the pair is still on track to have seen its fourth consecutive weekly fall.

Sterling’s (GBP) gains in reaction to the hopes that a worst-case Brexit could be avoided were rather limited, as Brexit concerns still dominated the British currency’s outlook.

Meanwhile, the Euro (EUR) was supported by slightly stronger Eurozone data on Friday following a week of underwhelming stats, making investors even more hesitant to buy GBP/EUR too much.

Pound (GBP) Exchange Rates Avoid Further Losses on Hopes ‘No-Deal’ Can Be Avoided

The Pound (GBP) outlook has been marred by Brexit uncertainties in recent weeks, with fears that a worst-case scenario ‘no-deal Brexit’ is becoming a bigger possibility due to a lack of support for UK Prime Minister Theresa May’s negotiated UK-EU Brexit withdrawal deal.

As a result, Sterling found a little fresh relief at the end of the week, amid reports that senior officials in the UK Conservative and Labour parties were looking to ramp up attempts to block the possibility of a ‘no-deal’ outcome.

On Thursday, a cross-party group led Labour MP Yvette Cooper tabled an amendment that would only allow the UK to knowingly head towards a ‘no-deal Brexit’ if MPs voted for one.

The amendment has reportedly been signed by multiple notable Labour and Conservative MPs, but will not be voted on until UK Parliament returns from Christmas recess in the New Year. According to Cooper:

‘if the government won’t rule it out, then Parliament needs to find opportunities to stop the country reaching the cliff edge by accident’

Sterling demand was weighed slightly by Britain’s latest consumer confidence data. The data showed confidence hitting its lowest levels in five years, as analysts expected.

Euro (EUR) Exchange Rate Climb Softens Following Thursday Jump

After the Federal Reserve’s tone on US monetary policy spooked markets on Wednesday evening, the US Dollar (USD) tumbled. As a result, the US currency’s biggest rival, the Euro (EUR), saw a surge in demand.

This was the primary cause of Euro demand throughout Thursday’s session, as the shared currency benefitted from weakness in its rivals.

On top of that, Euro support has also been stronger following this week’s reported resolution in Italy-EU budget tensions.

The shared currency found some support on Friday, as some of the day’s notable Eurozone ecostats beat expectations.

German consumer confidence and French business confidence beat forecasts, helping to limit Euro losses. However, as France’s final Q3 growth rate results fell slightly short the Euro was unable to hold its best levels.

Pound to Euro (GBP/EUR) Exchange Rate Outlook Volatile as 2018 Heads to an End

Markets are likely to be quiet during the final full week of 2018, with markets closed some parts of next week amid the festive holiday period.

Indeed, the only relevant notable datasets due for publication next week will French jobless data from November on Thursday, followed by UK finance mortgage approvals and German inflation on Friday.

Britain’s finance mortgage approvals data is likely to be brushed over, and the Pound (GBP) is likely remain volatile throughout the week as investors remain anxious about the uncertainty still surrounding the Brexit process despite the year heading to an end.

With UK Parliament on break for winter recess, there is unlikely to be much development in the Brexit process or UK politics throughout the week either.

However, any signs of a shift in opinion regarding the best way for MPs to proceed with Brexit could influence the Pound to Euro (GBP/EUR) exchange rate outlook throughout the week.