Pound to Euro rates have climbed today despite taking a significant drop yesterday ahead of the Parliamentary vote in the House of Commons which took place late yesterday.
UK Prime Minister Theresa May suffered another defeat in the House of Commons which was lost by 303 votes to 258. Brexit remains the major driver for Pound to Euro rates and these coming weeks ahead of March 29th are likely to create major volatility for the pair. Although the Government lost the vote last night, Downing Street has stated that the defeat would not change the negotiating approach to talks with the EU.
Pound to Euro rates: Big decisions ahead for Brexit talks
With time running out as the deadline draws closer there will need to be some big decisions made at this final juncture. Whatever decisions are made and the outcome of the Brexit negotiations will likely create a major reaction as one path will ultimately need to be decided upon. Put simply a deal agreed should see the pound make some healthy gains and a no deal outcome will likely see the pound drop sharply. In the meantime the markets are trying to second guess the outcome which is seeing the pound trading on a lower footing against the Euro.
If a deal is reached then there are likely to be material gains for Pound to Euro rates. Investment in my view would flood back into the UK and with economic worries in France, Spain, Italy and Germany the Euro is likely to come under renewed pressure.
The outlook for the Euro
Germany may find itself in a technical recession like Italy has already done. This would raise concerns over future growth in the EU bloc. There are a number of political issues at present, not just the unrest in France with Gilets Jaunes demonstrations, but also in Italy and Spain all of which point to an uncertain outlook for the economic health of the EU.
UK Retail Sales data expected today
UK retail sales numbers for January are released this morning and may provide some support for the pound on a bigger number. Early indications suggest that sales were healthy although much of this is due to strong discounting which was seen in January so next month’s data may provide a more realistic snapshot of the health of the high street.
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