{"id":4885,"date":"2018-09-18T00:00:00","date_gmt":"2018-09-18T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100647-gbp-eur-imf-brexit-warning\/"},"modified":"2018-09-18T00:00:00","modified_gmt":"2018-09-18T04:00:00","slug":"100647-gbp-eur-imf-brexit-warning","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100647-gbp-eur-imf-brexit-warning\/","title":{"rendered":"GBP\/EUR: Pound Steady vs Euro Despite Stark IMF Brexit Warning"},"content":{"rendered":"<p>The pound euro exchange rate traded within a tight range on Monday.. With both the euro and the pound broadly in favour, the pair traded most of the day flat before the pound advanced towards the close, finishing atf \u20ac1.1266.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>What do these figures mean?<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>\n<p> 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. <\/p>\n<p> For example, it could be written: <em>1 GBP = 1.13990 EUR<\/em> <\/p>\n<p> <em>Here, \u00a31 is equivalent to approximately \u20ac1.14. This specifically measures the pound\u2019s worth against the euro. If the euro amount increases in this pairing, it\u2019s positive for the pound.<\/em> <\/p>\n<p> Or, if you were looking at it the other way around: <em>1 EUR = 0.87271 GBP<\/em> <\/p>\n<p> <em>In this example, \u20ac1 is equivalent to approximately \u00a30.87. This measures the euro\u2019s worth versus the British pound. If the sterling number gets larger, it\u2019s good news for the euro.<\/em> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Pound traders were largely ignoring warnings by the IMF that a no deal Brexit would hit the UK economy. Christine Lagarde, head of the IMF stated on Monday that a disorderly exit from the EU would have dire consequences, with risk of a recession running high. The IMF currently predict that the UK economy will grow at 1.5% next year, based on a smooth exit from the EU. In the case of a hard, no deal, disorderly Brexit the IMF foresee the UK economy contracting rapidly. This view from the IMF supports the general view of economists that a soft Brexit will be better for the UK economy than a hard Brexit.<\/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>\n<p>Chancellor Philip Hammond was quick to endorse the IMF\u2019s findings, challenging Prime Minister Theresa May\u2019s position that the UK will succeed under any Brexit scenario. Theresa May\u2019s stance comes as she attempts to convince Brussels that she is prepared to walk away from the negotiating table, if needs be.<\/p>\n<p>Today, once again there is no high impacting economic data. As a result, pound investors will continue to focus on Brexit developments.<\/p>\n<h2><a href=\"#euro-inflation-remains-at-2\" id=\"euro-inflation-remains-at-2\"><\/a>Euro Inflation Remains At 2%<\/h2>\n<p>Euro investors cheered eurozone data in the previous session. Consumer price index (CPI) figures for the region showed that inflation remained constant at 2%. This remains in line with the European Central Bank\u2019s target and makes the winding down of the bond buying programme at the end of the year, increasingly likely.<\/p>\n<p>Analysts consider the winding down of the bond buying programme as hawkish and a step closer to rising interest rates. So, although analysts are not expecting an interest rate rise until the summer of 2019, inflation at 2% and the conclusion of the bond buying programme are steps on the way to tighter monetary policy.<\/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>\n<p>Today, investors will be looking towards ECB Governor Mario Draghi, who is due to make a speech.<\/p>\n<hr \/>\n<p><small><\/p>\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>The pound euro exchange rate traded within a tight range on Monday.. With both the euro and the pound broadly in favour, the pair traded most of the day flat before the pound advanced towards the close, finishing atf \u20ac1.1266. What do these figures mean? When measuring the value of a pair of currencies, one [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":4886,"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":{"0":"post-4885","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eur","8":"category-gbp","9":"tag-brexit","10":"tag-eur","11":"tag-gbp"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GBP\/EUR: Pound Steady vs Euro Despite Stark IMF Brexit Warning - 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\/100647-gbp-eur-imf-brexit-warning\/\" \/>\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\\\/100647-gbp-eur-imf-brexit-warning\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100647-gbp-eur-imf-brexit-warning\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/EUR: Pound Steady vs Euro Despite Stark IMF Brexit Warning\",\"datePublished\":\"2018-09-18T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100647-gbp-eur-imf-brexit-warning\\\/\"},\"wordCount\":850,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100647-gbp-eur-imf-brexit-warning\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100647-gbp-eur-imf-brexit-warning.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\\\/100647-gbp-eur-imf-brexit-warning\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100647-gbp-eur-imf-brexit-warning\\\/\",\"name\":\"GBP\\\/EUR: Pound Steady vs Euro Despite Stark IMF Brexit Warning - 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