The British pound is higher against the euro on Friday afternoon with Britain just hours away from leaving the European after 47 years of membership. The pound is gaining for a second day on Friday following the decision by the Bank of England to keep UK interest rates steady. As it stands, the pound is headed for a second straight week of gains against the euro.
GBP/EUR was higher by 21 pips (+0.18%) at 1.1881 with a daily price range of 1.186 to 1.192 as of 1pm GMT. The currency pair rallied strongly in the morning but pulled back from an 8-day high and close to multi-year resistance at 1.19 as the day went on.
GBP/EUR – Speculations about whether Britain would ever leave the EU after the 2016 referendum has ended
The UK will leave the EU at 11pm GMT time. While today is a momentous and significant occasion for both the United Kingdom and the European Union, it is having little bearing on currency markets. Foreign exchange markets will already be closed by time Prime Minister Boris Johnson makes a speech at 22:00 GMT and Britain officially leaves the EU at 23.00 GMT Friday evening.
Investors are already looking ahead to the kind of trade deal – or Free Trade Arrangement (FTA) – that the two economies will strike. Both sides are talking tough on demands as might be expected and negotiations will likely be fraught with difficulty. That could potentially put a lid on any gains in the pound once ‘Brexit is done’ this evening.
GBP/USD – The euro
There was a downbeat set of economic data from the Eurozone on Friday but the dollar pulling back from earlier gains enabled the euro to rise against most major currencies, barring the pound.
Eurozone CPI for January was reported at 1.4%, in line with expectations and up from 1.3% previously. However core inflation rose just 1.1%, missing expectations of a smaller fall to 1.2% from 1.3% in December. Adding to the downbeat tone, the preliminary estimate for Eurozone GDP was reported at just 0.1% quarter-over-quarter and 1% year-over-year.
