{"id":5043,"date":"2018-11-15T00:00:00","date_gmt":"2018-11-15T05:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100731-gbp-eur-lower-due-to-backlash\/"},"modified":"2018-11-15T00:00:00","modified_gmt":"2018-11-15T05:00:00","slug":"100731-gbp-eur-lower-due-to-backlash","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100731-gbp-eur-lower-due-to-backlash\/","title":{"rendered":"GBP\/EUR: Pound Lower vs. Euro As PM May Gets Cabinet Backing &#038; Braces"},"content":{"rendered":"<p>The pound surged to a session high against the euro on news that UK Prime Minister Theresa May had secured her Cabinets backing for the Brexit deal that she had negotiated. The pound euro exchange rate hit spiked to \u20ac1.1522, before actually closing lower on the day. The pound was also retreating in early trade on Thursday.<\/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>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.h If the euro amount increases in this pairing, it\u2019s positive for the pound. Or, if you were looking at it the other way around:<em>1 EUR = 0.87271 GBP<\/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.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The pound was very volatile in the previous session versus all of its peers as investor waited for the result of the crunch Cabinet meeting. Investors and political analysts alike knew that this was going to be an extremely difficult meeting for Theresa May. Particularly given the strong division in her Cabinet and the 10 or so hardline Brexiters. The pound rallied on Theresa May\u2019s achievement. However, there is still a long road ahead and the pound dropped as investors weighed up the challenge that Theresa May faces across the coming weeks.<\/p>\n<p>Market participants are growing increasingly concerned that a vote of no confidence is imminent as Eurosceptics show their discontent for the Brexit deal that has been forced upon them. Whilst interestingly there were no resignations on Wednesday evening, Theresa May hinted in her speech that she expects a severe political backlash from Wednesday\u2019s meeting.<\/p>\n<p>Should Theresa May see off her challengers, the Cabinet\u2019s agreement paves way for a European Council extraordinary meeting on 25th November. Theresa May will then need to find a way to push the deal through Parliament. Analysts expect this to be immensely challenging and could stop the Brexit deal from taking place.<\/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<h2><a href=\"#euro--rises-despite-growth-concerns\" id=\"euro--rises-despite-growth-concerns\"><\/a>Euro Rises Despite Growth Concerns<\/h2>\n<p>The euro was broadly in favour in the previous session. This was more to do with a weaker dollar than any specific euro strength. The euro often trades inversely to the dollar, so when the dollar drops the euro rallies.<\/p>\n<p>Economic data out of Europe was a mixed bag. Eurozone GDP data printed as analysts expected at 1.7% year on year in the third quarter down from 2.2% in the previous quarter. This is the slowest pace of growth for 4 years, which unnerved investors. Furthermore, Germany which is often referred to as the powerhouse of Europe recorded much slower economic growth than analysts were expecting.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why does poor economic data drag on a country\u2019s currency?<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Slowing economic indicators point to a slowing economy. Weak economies have weaker currencies because institutions look to reduce investments in countries where growth prospects are low and then transfer money to countries with higher growth prospects. These institutions sell out of their investment and the local currency, thus increasing supply of the currency and pushing down the money\u2019s worth. So, when a country or region has poor economic news, the value of the currency tends to fall.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\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 surged to a session high against the euro on news that UK Prime Minister Theresa May had secured her Cabinets backing for the Brexit deal that she had negotiated. The pound euro exchange rate hit spiked to \u20ac1.1522, before actually closing lower on the day. The pound was also retreating in early trade [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":5044,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1380,1379],"tags":[1395,1394],"class_list":["post-5043","post","type-post","status-publish","format-standard","has-post-thumbnail","category-eur","category-gbp","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 Lower vs. Euro As PM May Gets Cabinet Backing &amp; Braces - 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\/100731-gbp-eur-lower-due-to-backlash\/\" \/>\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\\\/100731-gbp-eur-lower-due-to-backlash\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100731-gbp-eur-lower-due-to-backlash\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/EUR: Pound Lower vs. Euro As PM May Gets Cabinet Backing &#038; 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