Pound euro exchange rate: GBP strengthens after Theresa May survives confidence vote
Pound euro exchange rate: GBP is trading higher against EUR (Image: GETTY)
The pound is appreciating against the majority of its peers this morning, amid a sense of cautious Brexit optimism as Theresa May prepares to head to Brussels. Just hours after surviving a no-confidence vote, the Prime Minister will meet with EU leaders in an effort to save her Brexit agreement. While EU leaders have ruled out making any additional changes to the deal agreed last month, they appear open to providing Mrs May with legal assurances regarding the temporary nature of the Irish backstop. Stephan Mayer, the German Interior Minister said: “I’m deeply convinced we should do everything to find a solution.
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“Certainly, one thing is clear, there is no room for changing the treatment, the agreement itself.
“But I’m deeply convinced the EU27 should be open to push forward clarifications, especially with regard to the backstop.”
However even if the Prime Minister is able to secure these assurances there is still no guarantee the deal will make it through Parliament, suggesting the pound’s recent volatility is far from over.
At the same time, the euro is showing limited movement this morning as EUR investors brace for the European Central Bank’s (ECB) rate decision later today.
I’m deeply convinced we should do everything to find a solution
While the ECB is unlikely to alter interest rates at this juncture, it is widely expected to bring an end to its substantial stimulus programme this month.
However the focus for markets may be on the bank’s forward guidance.
The euro could potentially dip if the recent slowdown in the Eurozone leads the ECB to talk down the possibility of a rate hike in 2019.
Looking ahead past the ECB rate decision, the pound euro exchange rate may continue to accelerate through to the end of the week with the release of the Eurozone’s latest PMI figures.
Growth in the bloc’s private sector has persistently fallen in recent months, having struck a two-year low just last month.
Should this downtrend continue in December it is likely to raise further concerns regarding the health of the Eurozone in the fourth quarter, potentially prompting the euro to weaken.
Meanwhile a lull in UK data will leave pound investors to focus on Brexit for the remainder of this week’s session likely strengthening the pound if the PM’s trip to Brussels proves to be a success.