Pound to Euro Exchange Rate Jumps as UK Supreme Court Rules Against Government
Updated 16:40 BST 24/09/2019:
The Pound Sterling to Euro (GBP/EUR) exchange rate ultimately advanced on Tuesday, as investors digested the day’s surprising UK political developments.
Britain’s Supreme Court, the highest court in the islands, ruled unanimously that it was unlawful for the government to prorogue parliament for as long a period as it did.
The ruling declared the prorogation void, and parliament is now expected to reconvene tomorrow.
This bolstered demand for the Pound (GBP), amid hopes that parliament would have more time to take action against the possibility of a no-deal Brexit.
GBP/EUR was trending above the week’s opening levels, at around the level of 1.1332, at the time of writing.
Pound to Euro Exchange Rate Struggles for Direction Ahead of Supreme Court Decision
Investors sold the Pound (GBP) yesterday, but as the Euro (EUR) saw its own broad weakness the Pound Sterling to Euro (GBP/EUR) exchange rate has ultimately seen narrow trade.
After seeing modest gains last week and climbing from the level of 1.1288 to 1.1317, GBP/EUR hasn’t moved too far from the week’s opening levels so far this week.
At the time of writing on Tuesday, GBP/EUR was trending closely to the level of 1.1300. This also leaves it less than a cent below last Friday’s three-month-high of 1.1371.
The Pound has been falling on fresh fears that the UK government could still seek a no-deal Brexit, while the Euro has been unappealing due to worsening Eurozone recession jitters.
Pound (GBP) Exchange Rates Jittery with Brexit Uncertainties in Focus
At the beginning of the week, investors sold the Pound on fresh fears that a no-deal Brexit was possible, marking an end to last week’s rally.
Officials from Ireland, as well as UK Prime Minister Boris Johnson, expressed doubt that a new deal on Brexit or the Irish border issue would be agreed any time soon. As a result, the Pound fell from its recent highs.
Investors were hesitant to move too much on the Pound this morning, as they anticipated a historic ruling from Britain’s Supreme Court.
Euro (EUR) Exchange Rates Unappealing as Markit PMI Projections Worsen Recession Fears
Yesterday saw the publication of Markit’s September Eurozone PMI projections. Almost all of the major prints, including the key German manufacturing print, came in well below expectations.
German manufacturing is on track to have contracted at a highly concerning 41.4, even dragging down the services PMI and causing a composite contraction of 49.1.
The Eurozone composite PMI printed at a near stagnant 50.4 overall, rather than remaining at the forecast 51.9.
The data made investors more anxious that the Eurozone economic slowdown may not have even bottomed out yet, causing fears of further slowdown and even recession.
Today’s Eurozone data was a little more mixed. French business confidence remained at 102 as expected, while Ifo’s German business confidence stats were better than expected.
However, German expectations were lower than expected, at 90.8.
Pound to Euro (GBP/EUR) Exchange Rate Awaits Brexit Developments and Further Eurozone Confidence Stats
Today, the Pound to Euro exchange rate is likely to react to Britain’s Supreme Court ruling on whether or not the government’s long prorogation of parliament was unlawful.
Looking ahead though, Brexit and Eurozone data will come into focus.
While no breakthrough in Brexit talks is expected at this week’s UN Assembly, any progress or developments in expected talks between UK Prime Minister Boris Johnson and EU leaders could still be highly influential for the Pound.
The Pound would rise in the event that there is any fresh optimism on talks, but could fall if Johnson continues to entertain the possibility of a no-deal Brexit.
There is still notable Eurozone data due to be published this week, largely confidence stats.
French consumer confidence from September will be published tomorrow, followed by GfK’s October consumer confidence survey for Germany on Thursday, and the Eurozone’s overall business and consumer confidence survey stats on Friday.
Brexit news and Eurozone data is more likely to be influential, but CBI’s UK distributive trades report could also cause some Pound to Euro (GBP/EUR) exchange rate movement in the coming days.