Is there a Brexit breakthrough?
The pound to Euro exchange rate is on a dangerous footing after the British government put forward new proposals yesterday surrounding the controversial Irish back stop. Rates for GBP EUR currently sit just above 1.12 for the pair and there could be considerable volatility in the days ahead on the back of all the latest Brexit developments. The proposals follow a big speech by the Prime Minister at the Conservative party conference yesterday.
The new proposals for a deal have the support of the Democratic Unionist Party which the government relies upon to win key votes in parliament. It is also believed that the government would have the support of most of the 21 Conservative rebels who previously voted against the government as well as a number of Labour MP’s to vote for any new deal reached with the EU. It would appear the government has the numbers so the question is whether the EU can agree to this new proposal deemed to be a compromise.
A formal response is expected later today and could see major market reaction. With the clock ticking as the 31st October Brexit deadline approaches any suggestion a deal cannot be reached could have negative consequences for the pound. Rates for GBP vs EUR continue to pivot on whether or not there will be a deal between Britain and the EU. Those with pending requirements to either buy or sell Euros would be wise to get in touch to consider planning around all the latest developments.
UK general Election expected soon
It is worth highlighting that at some point soon a general election is going to come. The opposition parties claims they want to call a general election but have not moved forward by calling a vote of no confidence in the Prime Minister. This is something that could happen at any time and could result in additional volatility for the pound to Euro exchange rates. There is also the issue of the Benn amendment which requires that the government request an extension before Britain leaves the EU, something the Prime Minister has vowed not to do. Prime Minister Boris Johnson is expected to prorogue parliament as soon as next week which would also likely keep the markets guessing.
Whilst Brexit will likely dominate the headlines at this important juncture there are a number of EU releases today which could create additional volatility for Euro exchange rates. Purchasing Managers Index date for the services sector is released this morning as well as retail sales.
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