The euro to the pound interbank exchange rate has risen by +0.83% in the last day, from a low of 0.8606 yesterday on Wednesday 16th October, to 0.8678 today at the time of writing.
This may benefit you, because when you transfer money to the UK from the Eurozone, you could get a higher pound sterling total, compared to if you’d exchanged currencies yesterday.
To stay up-to-date with the euro to the pound interbank exchange rate, visit Pure FX’s Rates & Tools page. Here, select ‘EUR’ (Euro) to ‘GBP’ (Great British Pound) to see this week’s rates.
Also, to check what’s affecting the value of the Eurozone’s common currency versus sterling, visit our EUR to GBP Exchange Rate Updates page. Here, click on the most recent article.
One reason why the EUR has strengthened versus the GBP on the interbank market in the last day is because no Brexit deal has been agreed yet, disappointing many financial investors.
However, looking forward, the euro to the pound interbank exchange rate could be affected, because the European Union (EU) remains optimistic that a Brexit agreement may be reached soon.
Euro Rates Today Rise, as DUP Rejects Boris’s Brexit Deal
As I mention, one reason why the euro to pound interbank exchange rate has risen in the last day is because the UK and EU have yet to agree a Brexit deal.
This has disappointed some financial market investors, who’d hoped that the two sides could reach a Brexit agreement, following a flurry of upbeat headlines over the last few days. We’ll see if a deal can be reached, looking ahead.
In particular, the UK and EU have yet to agree a Brexit deal, because even though the draft legal text is “pretty much ready”, according to the BBC’s Europe editor Katya Adler, UK Prime Minister (PM) Boris Johnson is yet to win the support necessary to pass the Brexit deal among MPs, in the House of Commons.
To be specific, Northern Ireland’s (NI) Democratic Unionist Party (DUP) object, reports The Guardian newspaper.
It’s reported that the DUP object to the draft deal, first because it would involve NI effectively staying in the EU’s Customs Union after Brexit, even though, legally, NI would remain part of the UK’s customs territory.
This means that goods passing between NI and the rest of the UK back and forth would be subject to customs checks, creating what’s called “a border down the Irish Sea.”
In addition, the DUP objects to Mr. Johnson’s draft deal, because even though it includes what’s called a “Stormont lock”, in which Northern Ireland’s devolved assembly could periodically vote on NI’s customs arrangements, the DUP fears that NI’s nationalists, Sinn Féin, could use this to their advantage.
In particular, Sinn Féin may use the lock to bring NI closer to Dublin, not London, by keeping Belfast subject to EU customs rules.
As a result, following talks with the UK PM at Number 10 Downing Street, DUP leader Arlene Foster released a statement, which says:
"We have been involved in ongoing discussions with the Government. As things stand, we could not support what is being suggested on customs and consent issues and there is a lack of clarity on VAT.” So for now, the DUP won’t support the deal.
The DUP’s support is considered crucial to passing a Brexit deal through Parliament, because if NI’s party isn’t happy, then a number of Conservative MPs have said that they won’t vote for the deal either.
At present, PM Johnson leads a minority Conservative government, in which he needs every vote he can get. So without the DUP, Mr. Johnson’s deal looks unlikely to pass Parliament.
The UK Parliament is due to sit this Saturday 19th October, in an extraordinary session. Mr. Johnson had hoped to use this date to pass his Brexit deal through the House of Commons.
However, unless the DUP changes its mind in the next few days, then Mr. Johnson may instead be obliged to comply with opposition MPs’ Benn Act, to request a Brexit extension beyond October 31st.
Moreover, it’s questionable whether Mr. Johnson’s Brexit deal would have passed Parliament this Saturday, even with the DUP’s support.
For example, Former Attorney General Dominic Grieve has told BBC Radio 4’s Today programme that it’s not “realistic” to expect MPs to digest and vote on a complex legal text, all on one day. So this has contributed to weaken the value of sterling, and so lift the euro.
EUR to GBP Rate Could Be Affected, as EU, ERG Upbeat About Deal
However, looking to the foreseeable future, the euro to the pound interbank exchange rate could be influenced, because even though the DUP has objected to PM Johnson’s Brexit, both the EU and other groups of MPs are upbeat about the possibility of passing an agreement.
This keeps hope alive that the UK and EU could at last finalise their Brexit deal in the coming days or weeks.
For example, yesterday the chairman of the influential, pro-Brexit European Research Group (ERG), Steve Baker, said after a meeting in Downing Street that "we will be looking at this deal in minute detail with a view to supporting it, but until we see that text, we can't say."
If so, this would be the first time that the ERG votes for a Brexit agreement, boding well for its being passed.
Similarly, in Brussels, the EU’s Chief Brexit Negotiator, Michel Barnier, told European ambassadors yesterday that a Brexit deal is “all but done”, reports The Telegraph broadsheet.
Mr. Barnier is one of the EU’s most influential figures in the Brexit process. So if he’s satisfied, this raises the probability that the EU’s 27 member states will approve the agreement too, among their respective governments and parliaments.
Elsewhere, Germany’s Chancellor, Angela Merkel, is reported to be confident of success following this “final sprint” this week.
Meanwhile, Ireland’s Taoiseach Leo Varadkar has raised the possibility that, even if the UK and EU don’t reach a Brexit deal at this week's EU council summit, the EU might hold an emergency summit next week, to finalise Brexit before this month’s end.
What’s more, it’s reported that PM Johnson will travel to Brussels today, to try and agree further compromises with the EU, to then bring the DUP on side.
So it’s clear that both sides remain fully engaged in agreeing a Brexit deal, with a view to avoiding extending Brexit beyond the current deadline of the end of this month. We’ll see if Mr. Johnson succeeds over the next few days.
It’s thought that, if the UK and EU reach a Brexit deal, this will benefit the UK’s future GDP (Gross Domestic Product) growth.
This is because, first, it will provide greater certainty for British and EU businesses about our political, economic and regulatory relationship. This will enable companies to start planning under the new rules, encouraging firms to hire new staff, and buy new equipment.
Second, it’s believed that a Brexit deal could benefit the UK economy, because we do roughly half our international trade with the EU.
So even though we’re pursuing what’s called a “hard” Brexit, in which we exit the EU’s Single Market and Customs Union, any Brexit deal with a cordial relationship with the EU is favourable to ‘No Deal’, in which no alleviating measures take place.
Euro Vs Sterling May Be Influenced, as UK Retail Sales Disappoint in September
Elsewhere, turning to the UK economy, the euro to the pound interbank exchange rate could be affected, because the UK’s economic data this week has continued to disappoint.
Following a week in which UK unemployment surprisingly rose in August, and UK inflation rose less than forecast in September, today we’ve learnt that UK retail sales rose below predictions last month too.
To be specific, according to the Office for National Statistics (ONS) today, UK retail sales grew by 0.0% in September month-on-month, in line with economists’ forecasts.
However, on a yearly basis, spending in the UK’s shops and online increased by 3.1%, -0.1% below predictions. This raises the possibility that Britons are whipping out their wallets less frequently, due to the Brexit uncertainty.
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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 Contact Us.