Once again, Brexit uncertainty weighed on the pound across the previous week. The pound euro exchange rate declined 0.3% across the week, snapping two straight weeks of gains. The pair struck a low of €1.1526, before picking up slightly into the weekend.
The British Parliament agreed to back Prime Minister Boris Johnson’s Brexit deal last week. However, they rejected his request to speed track it through the House of Commons and the House of Lords. As a result, it is almost impossible for Brexit to happen on 31st October.
Meanwhile, the European Union is in agreement that the UK requires an extension. However, they have been unable to agree, so far, on the length of the extension. Most countries are in favour of 3 months. However, France is pushing back on such a long delay. All 27 countries must agree over the length of the extension. Reports on Sunday evening suggest that the EU is close to agreeing to a January 2020 extension. They are also expected to agree on ruling out any renegotiation of the Brexit deal.
British domestic political uncertainty is also weighing on the pound. Boris Johnson wants to call a general election in order to break the Brexit deadlock. A vote in Parliament is due today. The prospect of further political disruption with a general election is unnerving investors. Boris Johnson needs to achieve a two thirds majority in order to call an election. Should he win the pound call fall.
Euro Investors Look Ahead To Inflation Figures
The euro was also broadly lower across the previous week, albeit stronger than the pound. European Central Bank President Mario Draghi chaired his last monetary policy meeting at the ECB. He painted a gloomy final picture of the health of the eurozone, warning that slowing global growth and Brexit uncertainty pose a risk to growth in the eurozone. Concerns are growing that Germany is on the brink of recession.
Today there is no high impacting eurozone data. Investors will look towards inflation figures and GDP data for France and Italy due to be released later in the week. Soft figures could boost investor expectations that the ECB will ease monetary policy further this year.
|What do these figures mean?|
|When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written:
1 GBP = 1.13990 EUR
Here, £1 is equivalent to approximately €1.14. This specifically measures the pound’s worth against the euro. If the euro amount increases in this pairing, it’s positive for the pound.
Or, if you were looking at it the other way around:
1 EUR = 0.87271 GBP
In this example, €1 is equivalent to approximately £0.87. This measures the euro’s worth versus the British pound. If the sterling number gets larger, it’s good news for the euro.