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Euro Rates Today Near 7-Month High, on Brexit Uncertainty

Market CommentaryEuro Rates Today Near 7-Month High, on Brexit Uncertainty
Euro Rates Today Near 7-Month High, on Brexit Uncertainty
Euro Rates Today.

The euro to pound interbank exchange rate has hit 0.8978 today. This is just -0.1% below its highest in seven months, or since January 11th 2019, at 0.8986.

By comparison, back on May 5th, the euro was as weak as 0.8509 versus the British pound sterling. So it's since risen by close to +4.75 cents, or by +5.51%.

This may benefit you, if you're a Brit selling property abroad in Spain, France or Italy, or a Eurozone business owner importing UK goods or services.

This is because, when you transfer money to the UK, you might now get a higher pound total in your British bank account. This is compared to if you'd transferred money earlier in 2019.

In turn, this would make it more profitable for you to repatriate the funds from your property sale to the UK. Also, it would cut your international payments costs for your business.

To stay up-to-date with the value of the euro versus the pound, visit Pure FX's Rates & Tools page. Select 'EUR' to 'GBP' to see today's interbank exchange rate, and for the last week.

In addition, to check what's influencing the euro rates today, go to our EUR to GBP Exchange Rate Updates page. Click on the newest article to see what's affecting the euro against the pound.

A first explanation why the EUR to GBP interbank exchange rate has strengthened is because likely next Prime Minister Boris Johnson has renewed his pledge for a 'No Deal' Brexit.

A second factor why the euro to pound interbank exchange rate has neared this seven-month high is because a number of Conservative MPs are planning to stop a 'No Deal' Brexit, say reports.

A third reason why the euro has neared this seven-month high against the pound is because the UK's trade unions now support a second Brexit referendum and remaining in the EU.

Let's look more closely at these reasons why the EUR to GBP exchange rate has risen. You might find this useful, to help you decide when to transfer money to the UK later this year.

Euro Rates Today Rises, as Boris Renews 'No Deal' Pledge

As I mention, a first partial explanation why the euro to pound interbank exchange rate has neared this seven-month high is because likely next Prime Minister Boris Johnson has renewed his pledge to pursue a 'No Deal' Brexit, if necessary.

Speaking at the weekend, Mr. Johnson said he'd make Brussels "look into our eyes" to show his commitment to exiting the EU with a deal, reports The Times newspaper.

With his pledge, Mr. Johnson intends to demonstrate to the EU that the UK is serious about a 'No Deal'. In turn, this way the UK's likely next Prime Minister wants to extract concessions from Brussels, to avoid the UK exiting without an agreement.

After all, the UK is the European Union's second largest economy. So a 'No Deal' Brexit would damage the EU's growth outlook too.

Mr. Johnson's pledge this weekend follows other recent promises to pursue a 'No Deal' Brexit.

For example, when the ex-Mayor of London launched his campaign to replace Theresa May as Conservative Party leader and Prime Minister, he promised that the UK would exit the EU by the end of the extended deadline of October 31st "come what may, do or die".

However, while Mr. Johnson's pledge might win him support among the Tory Party members who'll vote to elect him as Prime Minister, Mr. Johnson's pledge worries investors and businesses.

This is because, first, the EU has already repeatedly said that it won't renegotiate the draft Brexit deal that it negotiated with Theresa May. So Mr. Johnson's words may fall on deaf ears.

Second, if the UK exits the EU without a deal, we'll have to resort to trading with Europe on World Trade Organisation (WTO) terms.

This would mean paying more tariffs and filling more bureaucracy to send British exports to the EU, with whom we do roughly half our international trade. This may weigh on the UK's future economic prosperity, which has weakened the pound.

Euro Rises Versus Pound, as Tory MPs Oppose 'No Deal'

In addition, a second factor why the euro to pound interbank exchange rate has neared this seven-month high is because a growing number of Conservative MPs say that they'll oppose a 'No Deal' Brexit.

This would frustrate likely next Prime Minister Boris Johnson's attempts to take the UK out of the EU without a deal, and could oblige Mr. Johnson to call a general election.

According to Sky News last week, Chancellor Philip Hammond has won the support of 30 Conservative MPs, to oppose a 'No Deal' Brexit.

Meanwhile, according to The Times newspaper this weekend, "dozens of Conservative MPs" are "plotting" to stop a 'No Deal'. This suggests that Mr. Johnson would face strong opposition to a 'No Deal' Brexit, from within his own party.

For example, Justice Secretary David Gauke told the BBC's Andrew Marr Show on Sunday July 7th that he's willing to resign to stop a 'No Deal' Brexit.

Mr. Gauke said that: "Given where the parliamentary majority is and the strength of feeling on a no-deal Brexit, I think there probably will be a parliamentary way in which this can be stopped."

Although Mr. Johnson may be a new Prime Minister, he'll inherit Theresa May's majority of just four MPs in the House of Commons.

As a result, only a few Conservative MPs have to oppose a 'No Deal' Brexit, for Mr. Johnson's plans to fail. This would put Mr. Johnson in a weak position, both to negotiate with the EU, and to carry out his agenda as the leader of a new government.

As a result, if Tory MPs oppose a 'No Deal' Brexit, the next Prime Minister might call a general election.

This would be with the hope of winning a bigger majority in the House of Commons, and showing support for a 'No Deal' Brexit among British voters. However, although this would be Mr. Johnson's objective, there's no guarantee that he'd get his wish.

After all, according to the latest YouGov polls, voters are evenly split between four parties, namely the Conservatives, Nigel Farage's Brexit Party, the pro-Remain Liberal Democrats, and Labour.

So it's likelier that, if Mr. Johnson calls a general election, he'd end up governing in a coalition with Mr. Farage. This would give Mr. Johnson less control over the UK's political direction.

With this in mind, the Conservative MPs' plans to stop a 'No Deal' Brexit further add to the UK's Brexit uncertainty. This is because, first they weaken Boris Johnson's position as a new Prime Minister, to negotiate with Brussels.

Second, they raise the risk of a UK general election in 2019, in which there's no telling who'd win. So this has contributed to weigh down the pound.

Euro to Pound Rate Rises, as Unions Support Remain

Also, another partial explanation why the euro rates today have risen is because the UK's trade unions have pledged their support to remain in the EU, and for a second Brexit referendum.

This will put pressure on the leader of the opposition Labour Party, Jeremy Corbyn, to adopt this position too. This would further complicate the outlook for Brexit for the UK.

Yesterday, the UK's trade unions, including Unite, Amicus and the T&G, adopted a common posture toward Brexit. Namely, this is staying in the EU and supporting a second referendum, reports The Guardian newspaper.

Following this announcement, Labour's Deputy Leader Tom Watson said on Twitter that: "Remain is who we are. Our values are remain, our hearts are remain."

Meanwhile, Labour Shadow Chancellor John McDonnell asked Mr. Corbyn to adopt a pro-Remain position "sooner rather than later".

In part, the unions have adopted this position, because at the European Parliament elections in May, Labour's share of the vote fell to just 14%. This is because Labour's policy about Brexit has so far been ambiguous.

The trade unions' shift increases the odds that, if there's a general election and Labour wins, Labour will announce a second Brexit referendum, while supporting remain.

This would further contribute to the UK's Brexit uncertainty, given that there are some many possibilities at present. These include a general election, a 'No Deal', or a second referendum. In turn, this has decreased the value of sterling.

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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