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Euro to Pound Rate Jumps, as May's Brexit Deal Voted Down

Market CommentaryEuro to Pound Rate Jumps, as May's Brexit Deal Voted Down
Euro to Pound Rate Jumps, as May's Brexit Deal Voted Down
Euro to Pound Rate. Image credit: Daniel Diaz Bardillo.

Welcome to Pure FX's latest update of the euro to pound interbank exchange rate!

The Eurozone's common currency rises versus sterling! The euro to pound interbank exchange rate has jumped in the past day, from a low of 0.8497 to a high of 0.8649, a move of +1.78%.

If you're a Brit thinking of selling your holiday home in Spain or France, or a European citizen planning to emigrate to the UK, this might be useful information for you to transfer money to the UK!

EUR to GBP Rate Rises, as MPs Vote Down May's Brexit Deal

The first factor why the euro to pound interbank exchange rate has risen is because, yesterday night, MPs in Parliament again voted down prime minister Theresa May's draft Brexit deal.

Parliamentarians opted against Mrs. May's proposal by 391 to 242, a loss of 149 votes. This follows MPs' voting against the prime minister's draft deal in January.

Following this, today and tomorrow, MPs will vote if to rule out a 'No Deal' Brexit, and whether to extend the UK's Article 50 negotiating timetable with the EU.

This continues the Brexit uncertainty, so is one reason for the pound's fall!

Euro to Pound Rate Climbs, as UK GDP Growth Stays Slow

Another reason why the euro has strengthened against the pound is because the UK's economic growth remained slow in the 3 months to January, said official statistics yesterday.

According to the Office for National Statistics on Tuesday, UK Gross Domestic Product (GDP) expanded by just +0.2% in the 3 months from November to January, the same rate as the previous 3 months.

This is well below the UK's economic growth rate before the Brexit referendum.

ONS economist Rob Kent-Smith said of these figures that growth "remained weak". This too has weighed on sterling!

Common Currency Jumps Versus Sterling, as UK Trade Deficit Expands

Moreover, a further explanation why the euro to pound interbank exchange rate has jumped is that the UK's trade deficit expanded in January.

The UK's trade deficit grew to -£3.825 billion at the start of this year, according to the ONS yesterday, beyond forecasts for a -£3.5 billion shortfall.

This is because the UK's exports to the EU fell in January, in particular shipments of vehicles and fuel.

According to the University of Sussex's Professor L. Alan Winters, these figures are not "terribly surprising" as "companies are moderately depressed", thus dragging down the value of the pound!

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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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