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GBP Nears 2-Week High Versus EUR, as EU Parliament Eases Brexit Stance

Market CommentaryGBP Nears 2-Week High Versus EUR, as EU Parliament Eases Brexit Stance
The pound to euro interbank exchange rate has hit 1.1356 today, its highest since February 9th, as the European Parliament wants the UK to have an "associate agreement" with the EU after Brexit, say new reports. Image credit: Carlos Paes.
The pound to euro interbank exchange rate has hit 1.1356 today, its highest since February 9th, as the European Parliament wants the UK to have an “associate agreement” with the EU after Brexit, say new reports. Image credit: Carlos Paes.

by Peter Lavelle

Welcome to Pure FX’s latest update of the pound to euro interbank exchange rate.

This tells you when it’s a favourable time to exchange pounds to euros, for your money transfer!

Sterling jumps against the common currency!

The pound to euro interbank exchange rate has hit 1.1356 today, its highest since February 9th, or close to 2 weeks.

What’s more, looking ahead, the pound could continue to climb against the euro. This is because:

1. The European Parliament wants the UK to have an “associate agreement” with the EU after Brexit, with “privileged” single market access, according to new reports yesterday.

This may lift the pound, because if the European Parliament wants the UK to have an “associate agreement” with the EU, this suggests that the EU is softening its Brexit stance!

2. The UK’s Brexit secretary David Davis said in a speech in Vienna yesterday that “We will continue our track record of meeting high standards after we leave the European Union.”

This could boost sterling, because Mr. Davis comments will alleviate concerns that the UK will pursue deregulation after Brexit, thus lifting the odds of a favourable deal with the EU!

3. Financial markets increasingly think that the UK and the EU will agree a Brexit transition deal, at the EU’s next summit on March 22nd/23rd.

This may strengthen the pound, because if the UK and the EU agree a Brexit transition deal on March 22nd/23rd, this will boost the UK’s economic growth outlook for this year and next!

4. Respected economists forecast that the UK and the EU will agree a free trade deal in 2 years, rather than 7 years like it took with Canada, as the UK and the EU are already closely aligned.

This could help sterling, because if the UK and the EU agree a free trade deal sooner, UK GDP will rise faster in future, thus boosting the UK’s international stature after Brexit!

5. The EU now looks likelier to agree a favourable Brexit deal with the UK, because the EU’s economy is growing strongly, and the EU has eliminated populist threats in elections.

This may aid the pound, because when the EU has more confidence economically and politically, the EU is more likely to agree a favourable Brexit deal with the UK!

With all this in mind, the pound to euro interbank exchange rate has neared this 2-week high, and could rise higher, looking forward!

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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.

References

1. Adam Payne, “The European Parliament is to call for Britain to have ‘privileged’ single market access after Brexit”, February 20th 2018, BusinessInsider.com, http://uk.businessinsider.com/european-parliament-brexit-resolution-association-agreement-single-market-2018-2

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