The pound to euro exchange rate has slipped from its 1.16 pedestal this morning following further Brexit delays from the House of Commons. Holding steady around 1.1550 at the time of writing the pound is still holding above the key 1.15 support level but looking for direction amongst the Brexit smog.
PM Boris Johnson pauses legislation for latest Withdrawal Agreement
Boris Johnson’s government looked close to progress yesterday evening when his amended Withdrawal Agreement Bill received support in the Commons by a majority of 30 votes. However, any attempt to push through the debate and secure a Brexit date of 31st October was stonewalled in a subsequent vote preventing Parliament from fast-tracking the withdrawal through the House of Commons with just three days of debate, as had been intended. The Prime Minister immediately paused the legislation as he waits for a response from EU officials of their intentions following this turn of events, and in consideration of the forced written request for a three month extension to our withdrawal from the European Union received over the weekend.
Johnson did not have to wait long as EU Chief Donald Tusk took to Twitter to state: “Following PM @BorisJohnson’s decision to pause the process of ratification of the Withdrawal Agreement, and in order to avoid a no-deal #Brexit, I will recommend the EU27 accept the UK request for an extension.” Germany’s Die Welt newspaper sums up EU thoughts on Brexit this morning with the headline: “The only thing that is clear is that Brexit is not happening on 31 October.” Having already warned that a general election would be sought if Johnson was defeated in Parliament last night, we now wait to see what the next move will be. Are we heading to the polls?
German Bundesbank suggest the economy may have fallen into recession
Meanwhile, the German economy continues to stall with the German Central Bank, Bundesbank, already suggesting that it may have fallen into recession. The central bank added, “The decisive factor here is the continued downturn in the export-oriented industry.”
Tomorrow we have key Manufacturing data being released for the German economy just hours before the European Central Bank (ECB) announce their decision on interest rates. Mario Draghi will conclude his final meeting as Chief of the ECB among expectations of no change to their current monetary policy.
Regardless of any tales of woe from the single bloc, pound to euro market movement continues to be driven by UK Politics. In essence, the decision about when to trade the pair will depend on your belief in the UK MPs ability to steer us through this course. Uncertainty has not been kind to the pound since the 2016 referendum and seen an average interbank rate in GBP/EUR of 1.1365, the recent rates can be seen as favourable for anyone looking to purchase the euro.
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