On Tuesday night, MPs rejected Theresa May’s deal for a second time and then last night MPs voted in favour of not crashing out of the EU without a deal at the end of the month. The news was welcomed by UK businesses and this was reflected in GBPEUR exchange rates. Shortly after the vote GBPEUR broke through 1.18 before retracting back to the 1.17s.
MPs will now prepare for tonight vote in regards to applying to the EU for an extension of Article 50. This vote could cause further volatility for GBPEUR exchange rates. The likelihood is that MPs will vote to extend Article 50 which could provide further strength for the pound. However if MPs don’t support it then as Jacob Rees-Mogg stated yesterday, law has been past therefore the UK will leave the EU without a deal at the end of the month.
For clients that are purchasing euros, GBPEUR exchange rates have increased 7 cents since the start of the year. To put this into monetary value, a €300,000 property purchase could now be £16,000 cheaper.
Its clear to see that the market is pricing in the chances of the UK extended Article 50, therefore if it materalises this evening I expect the pound will strengthen but not by a substantial amount. However, if MPs don’t support it, the improvements we have seen since the start of the year could diminish quickly. If you are purchasing a property in Europe short term and would like to discuss the market and the options available to you feel free to use the contact form below to get in touch.
In other news, an important data release to look out for is Consumer Price Index data released on Friday for the EU. Last week the European Central Bank (ECB) released that they will be lending under performing banks cheap loans towards the back end of the year to stimulate growth in the bloc. If inflation falls further, this seems like a sensible move from the ECB, however it would show further problems are on the horizon for the single currency long term.