In today’s update about when to buy Euros, we’ll see how Sterling has fallen in value against the Euro. This is because Prime Minister Theresa May seems to be destined for failure again, when she puts her draft Brexit deal before the House of Commons in early June.
Mrs. May’s deal has failed on three occasions and it seems there is little change from the previous proposals. I believe that the chances of the deal going through are slim.
Strong opposition to May’s Brexit bill impacts GBP/EUR
Titular heads from within and outside the Conservative Party have made it clear that they are in opposition to the current deal. This does not bode well for the next vote in the House of Commons.
GBP/EUR breached 1.17 recently, yet I was unconvinced that the rally would last. I was of the opinion that the rise was false. This is because it was based on positive talks between the Tories and Labour and getting a deal through, before the European Parliament elections held on 23rd May.
I believed there was little chance of this, and I feel the same about Mrs. May getting a deal through in early June. The Prime Minister has had more than two years to negotiate an acceptable deal, and even at this stage, it seems we are far from achieving that.
Brussels’ stance remains the same. The European Commission’s spokesman Margaritis Schinas recently spoke and stated that there would be no concessions made and the deal offered will remain the same.
The breakdown in talks between Labour and the Conservatives has not helped the Pound, and GBP/EUR now sits in the 1.14s. The recent movements show that the Pound to Euro rate is being dictated by Brexit news.
If we look EUR/USD, it is close to a yearly low. This is as investors seek to put their funds into safe haven currencies such as the US Dollar, in times of global economic uncertainty. Another catalyst is the weak economic performance in the Eurozone.
Is the Euro going to go up?
I think the Pound will remain fragile until we have firm progress on Brexit. Again, we are now below the 1.15 resistance point on GBP/EUR that held strong for 18 months, up to pre-March this year. Every time it was breached, the rates quickly retreated. It will be interesting to see if it holds up, moving forward.
Be aware that if Mrs. May resigns following the deal failing to go through Parliament, we could actually witness Sterling strengthen. This is because the Prime Minister’s leaving could be perceived as positive for Brexit negotiations, despite the fact that political uncertainty usually weakens the currency in question.
Let us pray that former Foreign Secretary Boris Johnson doesn’t gain power. He mis-sold Brexit and has tried to undermine negotiations at every opportunity. He is an example of a man with his own agenda, not that of the people.
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