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GBP/EUR Rate Rises, Ahead of Parliament's Indicative Votes

Market CommentaryGBP/EUR Rate Rises, Ahead of Parliament's Indicative Votes
GBP/EUR Rate Rises, Ahead of Parliament's Indicative Votes
GBPEUR Exchange Rate. Image credit: Coyot.

The pound to euro interbank exchange rate has risen by +0.71% in the last day, from a low of 1.1645 up to 1.1729. Moreover, since the start of the year, when sterling was as low as 1.1087 versus the euro, the exchange rate has climbed by +5.79%.

To put this into context for you, at today's interbank exchange rate, £250,000 would be worth 293,225€. This compares to 277,175€ on January 1st. That's a rise of +16,050€ in the last 3 months.

If you're a Brit thinking of buying a holiday home or retiring in the Mediterranean, this may be of interest to you, for when you transfer money to Spain or France.

GBP/EUR Rate Rises, as MPs to Vote on Brexit Options

A significant reason why the pound to euro interbank exchange rate has risen is because MPs in Parliament will today vote on their Brexit preferences, reports the BBC.

On Monday, MPs chose by 329 to 302 votes to take control of the House of Commons' agenda, and run a series of "indicative votes" on what sort of Brexit they want. This will include votes on a "Norway Plus" deal, in which the UK remains in the EU's Single Union, or even a second Brexit referendum.

It's thought that MPs favour a "softer" Brexit than the draft deal negotiated by Prime Minister Theresa May's government.

For example, economist Kallum Pickering notes that "a majority of Members of Parliament (MPs) are in favour of a) retaining close ties with the EU and b) preventing a no-deal hard Brexit. So more power for Parliament contains the risk of a hard Brexit."

As a result, it's likely that Parliament will vote to stay closer to the EU in future than previously hoped for. This may give confidence to UK businesses and investors. So this has strengthened the pound versus the euro.

Pound to Euro Rate Rises, as Rees-Mogg Signals Support for May's Deal

In addition, a further explanation why sterling has strengthened versus the euro is because leading Brexiteer Jacob Rees-Mogg has signalled that he may support Theresa May's draft Brexit deal, says The Financial Times.

On Tuesday, Mr. Rees-Mogg, the leader of the European Research Group (ERG) of "hard" Brexiteer MPs, tweeted that he might vote for Mrs. May's planned deal. This is to ensure that Brexit happens. To be specific, Mr. Rees-Mogg said that "The choice seems to be Mrs May’s deal or no Brexit."

Given this, it's hoped that Mr. Rees-Mogg ERG group of MPs will now vote for the Prime Minister's draft agreement. This is if Mrs. May chooses to forward the draft deal for a third vote in Parliament.

In turn, this makes it likelier that Mrs. May's deal would pass, and further reduces the odds that the UK will exit the EU with a 'No Deal'. So this too has helped support the pound against the euro!

Italian Confidence, UK Retail Sales Data May Affect GBP/EUR Rate

Also, looking to today, economic data from both Italy and the UK may influence the pound to euro interbank exchange rate too, according to FX Street.

First, at 09.00 GMT, Italy will release its consumer and business confidence data for March. It's forecast that both surveys fell this month, which may affect the value of the euro.

Then, at 11.00 GMT, the Confederation of British Industry (CBI) will release its UK distributive trades survey for March, measuring British retail sales. It's predicted that retail sales climbed by +5.0% this month, ahead of February's 0.0%. If this is the case, this may impact on sterling later today also.

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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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