GBP/EUR Brexit Special : How will the vote shape Pound to Euro exchange rates?

Are you ready for Super Saturday?

Pound to Euro exchange rates could be in for a time of increased volatility as we enter next week. This weekend special will follow events as they unfold with live updates tomorrow and Monday as to how GBP/EUR is reacting to the news.

This weekend, the British parliament will sit on a Saturday for the first time since 1982 and debate the new Withdrawal Bill that Boris Johnson has negotiated with the EU.

In a sign of the impending volatility Lloyds stated in their market research yesterday that ‘the pound will be opening at significantly different levels on Sunday’. This just highlights how with the MP’s appearing to be split down the middle at present, the vote could go either way in favour or against Boris Johnson and the Government.

Sterling to Euro rates have risen to highs this week of 1.1660, levels not seen since May of this year. The rise has been in part due to expectation no-deal has become less likely and that an extension will be granted.

What is the Letwin amendment?

The market will be very conscious this weekend too of the Oliver Letwin amendment which seeks to ensure an extension is requested anyway to avoid the potential for the UK Government seeking to deliver a no-deal exit by default, if they cannot get further approval for the Withdrawal Bill, after MP’s have voted on it this weekend.

Is an extension from the EU likely?

GBP/EUR levels have been as low as 1.0647 on the interbank rate this year when no-deal looked likely. With the EU making clear any will to grant an extension will be limited, it appears if the Bill is voted down the chance of no-deal rises once again.

Morgan Stanley research quoted in the FT last week indicated no deal could see the pound lose 10%, whilst a deal might see it surge by 8%.

With sterling volatility having increased this week to levels not see since the EU Referendum vote back in June 2016, there is plenty for the market to be digesting this weekend.

Bear in mind, markets are closed over the weekend with the reaction from the events only likely to become clearer on very late Sunday evening when Asian markets open and Monday morning when British and European markets open.

I look forward to sharing the unfolding of events over the weekend and please contact me directly on [email protected] to discuss strategy and how this may affect your currency transfer.

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