{"id":4570,"date":"2018-05-17T00:00:00","date_gmt":"2018-05-17T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100477-gbp-eur-soft-brexit-optimism\/"},"modified":"2018-05-17T00:00:00","modified_gmt":"2018-05-17T04:00:00","slug":"100477-gbp-eur-soft-brexit-optimism","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100477-gbp-eur-soft-brexit-optimism\/","title":{"rendered":"GBP\/EUR: Pound Jumps vs Euro On Soft Brexit Optimism"},"content":{"rendered":"<p>Lower inflation in the eurozone saw investors sell out of the euro on Wednesday. The pound euro exchange rate climbed higher to a peak of \u20ac1.1451 as it looks to finish its third straight session on higher ground.<\/p>\n<p>The pound moved higher versus the euro, however this was more to do with euro weakness rather than any particular pound strength. The pound has been weak over the past month as it contends with soft economic data, a cautious Bank of England and UK labour market woes.<\/p>\n<p>Whilst Brexit has taken a back seat in driving pound movement over recent months, there could finally be some progress. The Scottish Parliaments refusal to give consent to the UK\u2019s EU Withdrawal Bill has unnerved pound investors. However this was quickly rectified by a report in a national newspaper than Britain will tell the EU that they will stay in the customs union beyond 2021. This mean that the UK will be heading for a soft Brexit, which is beneficial for UK businesses, the economy and therefore the pound. The news has pushed the pound higher, although traders will be waiting for further confirmation.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why is a \u201csoft\u201d Brexit better for sterling than a \u201chard\u201d Brexit? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>A soft Brexit implies anything less than UK\u2019s complete withdrawal from the EU. For example, it could mean the UK retains some form of membership to the European Union single market in exchange for some free movement of people, i.e. immigration. This is considered more positive than a \u201chard\u201d Brexit, which is a full severance from the EU. The reason \u201csoft\u201d is considered more pound-friendly is because the economic impact would be lower. If there is less negative impact on the economy, foreign investors will continue to invest in the UK. As investment requires local currency, this increased demand for the pound then boosts its value. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>At the beginning of the week there was a flurry of UK economic data releases, however the second half of this week is very quiet as far as data is concerned. Therefore, Brexit developments could remain in focus.<\/p>\n<h2><a href=\"#eurozone-inflation-remains-weak\" name=\"eurozone-inflation-remains-weak\"><\/a>Eurozone Inflation Remains Weak<\/h2>\n<p>Inflation in the eurozone ticked lower in April to 1.2%, down from 1.3%. This was in line with analysts expectations; however stagnating inflation is a problem for the bloc and isn\u2019t going anywhere fast. In addition to low inflation, euro trades are also concerned about the developing political situation in Italy. The 5 Star \/ League are reportedly looking for a cut back on Italy&#8217;s debt to the EU, in addition to considering leaving the euro.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Interest rates are key to understanding exchange rate movements. Those who have large sums of money to invest want the highest return on their investments. Higher interest rate environments tend to offer higher yields. So, if the interest rate or at least the interest rate expectation of a country is relatively higher compared to another, then it attracts more foreign capital investment. Large corporations and investors need local currency to invest. More local currency used then boosts the demand of that currency, pushing the value higher. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>The inflation figures followed industrial production figures earlier in the week, which were lower than what analysts had been anticipating. Therefore, they offered little support to the euro. Today is expected to be a relatively quiet day for the euro with just construction output data for market participants to digest.<\/p>\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td>\n<p><small><em><br \/>\nThis publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Inc., Currency Live or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. Consult our <a href=\"https:\/\/currencylive.com\/risk-warning\/\">risk warning<\/a> page for more details.<\/em><\/small><\/p>\n<p><small><em>This article was initially published on TransferWise.com from the same author. The content at Currency Live is the sole opinion of the authors and in no way reflects the views of TransferWise Inc.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lower inflation in the eurozone saw investors sell out of the euro on Wednesday. The pound euro exchange rate climbed higher to a peak of \u20ac1.1451 as it looks to finish its third straight session on higher ground. The pound moved higher versus the euro, however this was more to do with euro weakness rather [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":4571,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1380,1379],"tags":[1386,1395,1394],"class_list":["post-4570","post","type-post","status-publish","format-standard","has-post-thumbnail","category-eur","category-gbp","tag-brexit","tag-eur","tag-gbp"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GBP\/EUR: Pound Jumps vs Euro On Soft Brexit Optimism - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/100477-gbp-eur-soft-brexit-optimism\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Fiona Cincotta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100477-gbp-eur-soft-brexit-optimism\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100477-gbp-eur-soft-brexit-optimism\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/EUR: Pound Jumps vs Euro On Soft Brexit Optimism\",\"datePublished\":\"2018-05-17T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100477-gbp-eur-soft-brexit-optimism\\\/\"},\"wordCount\":736,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100477-gbp-eur-soft-brexit-optimism\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/hard-soft-smooth-cliff-edge-brexit.jpg\",\"keywords\":[\"Brexit\",\"eur\",\"gbp\"],\"articleSection\":[\"EUR\",\"GBP\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2018\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100477-gbp-eur-soft-brexit-optimism\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100477-gbp-eur-soft-brexit-optimism\\\/\",\"name\":\"GBP\\\/EUR: Pound Jumps vs Euro On Soft Brexit Optimism - 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