Jacob Rees-Mogg, the leader of the pro-Brexit European Research Group (ERG) affects the sterling vs euro interbank exchange rate in the following way.
When Mr. Rees-Mogg's words and actions make a Brexit deal look likelier, the pound tends to rise. On the other hand, when Mr. Rees-Mogg says or does something that makes a Brexit deal look further off, sterling often weakens.
If you plan to exchange pounds to euros in the foreseeable future, you might therefore like to keep an eye on Mr. Rees-Mogg's interventions in Brexit, to help you decide when to transfer money abroad.
Sterling vs Euro Rate Gains, as Rees-Mogg Signals Support for May's Deal
Let's take an example, to illustrate Mr. Rees-Mogg's influence on sterling versus the euro.
Following months of opposition to Prime Minister May's draft Brexit deal, on March 26th 2019, the leader of the ERG signalled that he could change his mind, and support Mrs. May's planned agreement.
To be specific, Mr. Rees-Mogg tweeted that "The choice seems to be Mrs. May’s deal or no Brexit… May’s deal is better than not leaving at all".
This raised hopes on financial markets that, if Mrs. May put her draft deal to a third vote in Parliament, the ERG could support it, helping the deal pass.
As a result, that day the pound to euro interbank exchange rate rose by +0.71%, from a low of 1.1645 up to 1.1729. In addition, sterling gained against the US dollar too, from 1.3173 to 1.3203, an increase in value of +0.23%.
So this demonstrates that Mr. Rees-Mogg's tweets contribute to impact sterling versus the euro and US dollar.
Brexit, UK and Eurozone Economies Also Affect Value of Pound
That said, it's important to note that Mr. Rees-Mogg's words and actions are one of many factors that influence the foreign exchange rate.
At any one time, there are literally dozens of factors that affect the value of the pound versus foreign currencies like the euro and US dollar, both in and out of the UK.
For example, on March 26th 2019, the same day that the leader of the ERG tweeted that he may support Prime Minister May's draft Brexit deal, the House of Commons was voting to take control of the Brexit agenda. In particular, that day MPs organised a series of "indicative votes", to see which version of Brexit they prefer.
Similarly, on March 26th, we learnt that German consumer confidence fell in March, by -0.3 points to 10.4, below financial market forecasts for 10.8.
This signalled that the Eurozone's largest economy may continue to grow at a slow rate in early 2019, and also contributed to the pound to euro interbank exchange rate.
So to sum up, Jacob Rees-Mogg has affected the GBP to EUR exchange rate, when his interventions make a Brexit deal look more or less likely.
Importantly though, Mr. Rees-Mogg's tweets are one of many factors that make up the value of sterling versus the euro at any given time. This may be of interest to you, for when you transfer money abroad!
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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 [email protected]