In today’s euro rate forecast I look at the events that could impact GBP/EUR rates this week. Late on Monday night, Prime Minister Theresa May stood alongside European Commission President Jean Claude Junker, announcing to the world’s press that they had mutually agreed the legally-binding changes to the Brexit withdrawal deal.
PM May spoke with confidence explaining the latest amendments to the deal. The 3rd and final amendment, Jean Claude Junker was keen to point out, was the last thing needed before Parliament’s MPs would vote on her deal, perhaps reversing last month’s disastrous Commons defeat. If successful, this would allow Theresa May to keep her promise to deliver the Brexit voted by the people, and exit on 29th March.
This news gave the pound a massive boost, reaching 1.1790, its highest levels against the euro since May 2017. Unfortunately, and not surprisingly looking back at Brexit-related events over the last 3 years, these gains proved to be short-lived.
On Tuesday morning, news started to creep out that many MPs were not convinced by the latest amendments and would not back the deal May is due to present.
By midday, Attorney General Geoffrey Cox stood in the House of Commons and made clear that this latest deal was little to no different from previous proposals. The new deal added no assurances regarding the well-documented Irish backstop. Essentially, the updated deal only reduces the risks of being tied in the Irish backstop forever, however it fails to eliminate the risk.
GBP/EUR rate falls from 22-month high
As a result, after seeing the pound hit a 22-month high against the euro, the gains were quickly reversed by midday on Tuesday. Sterling fell to a low of the day at 1.1554, as the market struggles to work out where we go next with Brexit.
We will now closely watch this evening’s vote in the House of Commons to see if the unlikely will happen and Theresa May gets the numbers needed to back her deal. The last time out she was defeated by 230 votes.
Should I wait to buy euros?
With 17 days to go until the originally-proposed leave date, the 29th of March, and probably twice as many more questions than answers, it is near-on impossible to gauge which way next the interbank GBP/EUR exchange rate will head.
If you have a requirement to exchange funds between pounds and euros and you are concerned about the movements in the rates, feel free to get in touch with me discuss your needs and how we can help you achieve the best rates. You can email me directly here.