The pound to euro exchange rate stands at 1.1473 at the time of writing, having been as low as 1.1090 on Friday. This is sterling’s highest versus the common currency in nearly 4 months.
This is because UK Prime Minister Boris Johnson and Irish Taoiseach Leo Varadkar had a surprisingly fruitful Brexit discussions on Thursday. This prompted EU Chief Brexit Negotiator, Michel Barnier, to recommend that negotiations enter the final “tunnel” phase, ahead of next Thursday 17th’s EU summit.
Next week, on Tuesday UK labour market data is released, followed by UK inflation statistics on Wednesday. Importantly, we’ll see if PM Boris Johnson can agree a Brexit deal on Thursday at the EU Summit. Expect volatility for GBP/EUR rates ahead of this key EU Summit.
Pound to Euro forecast: What is the likelihood of a Brexit deal?
It’s thought that next Thursday’s EU summit is the last chance for the UK and EU to reach a Brexit deal, ahead of the deadline of October 31st. If PM Johnson can’t make an agreement with Brussels, then according to the Benn Act, he’s obliged to request another extension by October 19th.
JPMorgan expect that an agreement may be struck, adding that both sides seemed to have found a solution to the difficult Irish border issue. Reuters mention, “The bank now sees a 50% chance of a withdrawal agreement being struck with a ‘modified/time-limited’ Irish backstop.”
That said, it’s possible that Mr. Johnson may be looking for loopholes to get around the Benn Act. This Wednesday, Business Secretary Andrea Leadsom told ITV’s Robert Peston that Mr. Johnson may send two letters to the EU. The first would comply with the Benn Act, while the second would ask the EU to ignore it.
If the hope for a deal continues, we could see pound to euro exchange rates reach higher, but we have been at this stage before and historically the pound has climbed back down after making earlier gains. If you have an upcoming currency transfer, you may wish to pay particular attention to next week’s Brexit developments.
UK unemployment rate, wage growth, inflation and retail sales may affect Pound to Euro rate next week
Next Tuesday 15th we’ll learn the UK’s unemployment rate for the three months to August, as well as the UK’s average earnings. In recent years, the UK’s strong labour market performance has been a bright spot in spite of the Brexit uncertainty, and it’s forecast that this will continue.
Also, next Wednesday 16th, the UK’s inflation figures for last month will be published, while the UK’s retail sales data for September will be made public on Thursday 17th.
Meanwhile, Eurozone data will include Monday’s industrial production figures for August, and September’s inflation statistics, due on Wednesday.
For more information on GBP/EUR rates or if you have an upcoming currency transfer, feel free to contact me directly using the form below.