The pound to euro exchange rate was quiet in early trading on Wednesday as traders await the UK Parliament’s vote on Boris Johnson’s Brexit deal.
Pound bulls have been disappointed by the lack of gains on the Brexit deal and this has led to some profit taking and weakness in the quiet holiday trade environment. Today’s Nationwide house price data saw prices rising to their biggest annual increase in six years.
The GBP to EUR rate was trading at 1.1025 ahead of today’s vote in Parliament. Sterling may see some support once the deal is formally approved.
Deal Edges Closer to Final Approval
The UK and European Union will sign their 1200-odd page trade agreement today with EU Chiefs Ursula Von Der Leyen and Charles Michel signing the document before it is flown to Boris Johnson.
The government will then seek to push through the new European Union (Future Relationship) Bill through the Commons and the House of Lords in one day, ahead of the deal taking effect on Thursday. The final efforts mean that the UK can continue to export goods into the EU market without tariffs or quotas.
Boris Johnson has said that the new deal will reset Britain’s relationship with the EU and end its “half-hearted” membership of the bloc, in order to trade as a sovereign equal.
Brexit hardliners in Johnson’s own Tory party agreed on Tuesday to support the deal, which will ensure its passing today, just one day before the deadline. The UK Labour party have already shown their support for the deal and it is almost guaranteed to pass.
Despite this, the deal could still be scuppered in the new year by MEPs in Brussels as they will have their own vote in January. The deal has been passed provisionally as an EU-only deal to rush it through but politicians will scrutinize the agreement in 2021.
Nationwide House Prices Boost the British Economy
Britain’s house prices have been a bright spot in a dark year and the latest Nationwide data has shown prices rising faster than expected in December to the largest annual gain in six years. Analysts had forecast a reading of 6.7% but the actual figure came in at 7.3%.
Tax incentives and a desire for larger living spaces in the lockdown environment have seen a big boost to demand in Britain’s housing market and the sector has been surprisingly resilient.
With Brexit closing out, the pound to euro rate will likely pivot around the outlook for the virus spread and vaccine rollout. Switzerland are the latest country to note five cases of the new virus strain and there is a risk of a second spread in the new year. Some nations have banned travel to the UK and South Africa over the latest virus outbreak.
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