Brexit negotiations remain unsettled and continue to disrupt currency markets.
The ups and downs of Brexit have created instability and fluctuation in the pound to euro exchange rate. GBP was experiencing a positive rise due to a promising Brexit development after European Union Commission President Jean-Claude Juncker stated, “we can have a deal” and “Brexit will happen.”
The statements came after a meeting and positive talks with Prime Minister Boris Johnson. But sterling quickly fell again once it was realized no major changes or progress occurred in spite of negotiations.
Brexit and Currency Exchange Rates
The pound is currently trading at 1.1226 against the euro, according to Bloomberg at the time of writing. Brexit is the barometer for sterling’s movement, which is choppy and unsettled.
Prime Minister Boris Johnson’s latest Brexit update has done little to stir the market. PM Johnson is about to set out his ‘final’ Brexit plan to Members of Parliament and unveiled his ‘take it or leave it’ Brexit offer.
It’s widely expected that Brexit MEPs will reject PM Johnson’s final Brexit deal as it is presently written. As the Brexit deadline approaches, the GBP is expected to be volatile as the UK-EU tries to come up with a deal each can approve and sterling may plummet if a no-deal Brexit happens, which is looking to be a possibility.
Three turbulent years have passed since the Brexit referendum. There is still uncertainty as to how the United Kingdom will leave the European Union, and at this point, no one knows how Brexit will go as the deadline is rapidly approaching.
British Pound Forecast
If the negotiations end in a no-Brexit deal, expect to see the pound fall across the board and could go as low as 1.10 against the euro and the low 1.20s against the dollar similar to the rates following the 2009 financial crash.
The pound’s volatility will remain in the news as the results of Brexit, PM Johnson’s talks with European leaders, and the Supreme Court about to rule on the legality prorogation of Parliament all will affect the pound to euro exchange rate. The markets will be watching for and grab onto and positive news resulting from the UK-EU talks.
Once again the pound was vulnerable as PM Boris Johnson unveiled his newest Brexit proposals. Brussels reportedly criticized the plan and the Prime Ministers’ announcement to grassroots supporters that it was a ‘final offer’ and the EU must come up with a compromise to meet its own demand of no threatening of the ‘integrity of the single market’ by an exit agreement with the UK.
What are the implications of such a move? It’s possible the UK could be headed into an Article 50 extension facilitating a risky election or a no-deal
Brexit could devastate the GBP. The current Article 50 extension is rapidly disappearing as the clock ticks away the minutes to October 31st and the European Union has rejected all proposals presented to it.
Elias Haddad, a strategist at Commonwealth Bank of Australia, said “We doubt PM Johnson can reach a deal with the EU that can win over a majority of MPs in the fragmented UK House of Commons. If Johnson can’t reach a Brexit deal by 19 October, the Brexit date will likely be delayed from 31 October 2019 to 31 January 2020 and early general elections would probably take in place in November.”
Prime Minister Boris Johnson is sticking to his decision that ‘with or without a deal’ the United Kingdom will leave the European Union on October 31st in spite of the fact Parliament legislated against it.
The pound currency exchange rates will continue to be in flux as the October 31st deadline approaches. Some strategists believe the chances of a hard Brexit end in October is minimal, it’s still a possibility and it is dragging the pound down.
Parliament’s act of law made last month requires the Prime Minister to request and Article 50 extension if he hasn’t reached a deal with the EU by October 19th. And the clock continues ticking.
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