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GBP/EUR Update: What impact has Brexit had on the Pound?
This article was provided by TorFX, an award-winning currency transfer provider.
It’s certainly been a rollercoaster month for the GBP/EUR exchange rate, with the pairing experiencing plenty of ups and downs throughout March as currency traders were kept busy trying to keep up with all the latest Brexit developments.
So what went down in March?
It’s been an eventful four weeks for the currency market, with the GBP/EUR exchange rate trading in a range between €1.14 and €1.17 as the Brexit headlines came thick and fast.
This volatility in the Pound was kicked off by a second ‘meaningful vote’ on Theresa May’s withdrawal deal. The deal was rejected by MPs once again, despite hopes a last minute concession from the EU could push it over the line.
Sterling rallied almost immediately, with subsequent votes seeing Parliament reject a no-deal Brexit and MPs vote to delay Brexit beyond March 29.
However May disappointed markets by only requesting a short Brexit extension, with a knee-jerk reaction sending Sterling into a tailspin. GBP/EUR tumbled to just $1.14, its worst levels of the month.
These losses were also most immediately reversed however, with Sterling bouncing back as the EU granted May’s request for a Brexit extension.
The GBP/EUR exchange rate then came within spitting distance of €1.18 at the end of March, striking a fresh 22-month high ahead of an attempt by Parliament to come up with an alternative Brexit solution through a series of indicative votes.
However, with MP’s unable to agree to a way forward and a third vote on May’s withdrawal deal resulting in another defeat for the government, the Pound was unable to achieve new highs.
So far in April we have seen Sterling back on the offensive, with markets hopeful that a new unified approach to Brexit could help to break the deadlock in parliament.
What happens next?
Trying to nail down exactly what might come next in the topsy-turvy world of Brexit is no mean feat, with each day seemingly adding new twists and turns to the saga.
However there are a few outcomes that appear possible at this stage.
The first (and likely most damaging to the Pound) would be a no-deal Brexit, with the UK crashing out of the EU without an exit agreement in place, likely resulting in major disruption to both the UK and EU economies.
A no-deal Brexit could be avoided if a parliamentary majority is found for either May’s deal or an alternative such as a proposed customs union. This would help to clear up some of the uncertainty surrounding Brexit and pave the way for the UK to leave on 22 May, likely boosting GBP exchange rates in the process.
There’s also the potential for the UK to seek a longer extension from the EU, which would prolong the uncertainty hanging over the Pound, but also open up the possibility of a second referendum, which could provide a major lift to GBP exchange rates.
However this would also result in the UK needing to participate in the EU elections, something both the UK and EU appear keen to avoid.
Ultimately who knows what curveballs Brexit might throw next? All we can say for certain is that there is plenty more volatility in the Pound’s future.
If you’ve got a currency transfer coming up and would like to talk through your options, get in touch with TorFX.
This article was provided by TorFX, an award-winning currency transfer provider. TorFX has helped over 55,000 people save time and money on their currency transfers since 2004 by offering excellent exchange rates, no fees and expert support.