The pound to euro exchange rate has dropped – a day after it made gains ahead of Prime Minister Theresa May’s speech. Hope for a second Brexit referendum saw GBP improve but the currency later slid as investors remained unimpressed with May’s words. Today will see the pound continue to react to yesterday’s speech as well as UK April inflation figures. Brexit-related uncertainty continues to weigh heavily on sterling, with the Bank of England unlikely to alter monetary policy.
The pound is currently trading at €1.138 against the euro, according to Bloomberg at the time of writing.
Michael Brown, currency expert at Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures.
“Sterling closed modestly lower against the euro on Tuesday, with the pound having retraced its early gains on an eventful trading day,” Brown said.
“At one point, sterling gained as much as 0.75 per cent, ahead of PM May’s speech, after reports broke that a second referendum would be offered as part of the deal.
“However, despite the rumours holding true, it was a case of ‘buy the rumour, sell the fact’ for markets – with investors largely unimpressed by the Prime Minister’s offer in addition to concerns persisting that the refreshed deal would not be able to gain a majority in Parliament.
The Prime Minister’s Brexit speech saw May offering MPs the chance to vote on whether to put her Brexit deal to a second referendum or not.
The vote would only be able to happen if May’s Brexit bill passes the first stage of voting in parliament.
She told the Cabinet: “The Withdrawal Agreement Bill is the vehicle which gets the UK out of the EU and it is vital to find a way to get it over the line.”
Senior parliamentary figures reacted with horror to the news. Boris Johnson tweeted: “The Bill is directly against our manifesto – and I will not vote for it. We can and must do better – and deliver what the people voted for.”
Jacob Rees-Mogg said: “The Prime Minister’s latest proposals are worse than before and would leave us bound deeply to the EU. It is time to leave on WTO terms.”
Vince Cable added: “The Prime Minister’s last ditch attempt to get her withdrawal agreement through the Commons without a confirmatory referendum attached is doomed to failure. Her authority is draining away.”
So how will the pound react today? Brown told Express.co.uk: “Turning to the day ahead, while focus will remain on Westminster and the fallout from yesterday’s speech, markets will also get to chew over April inflation figures from the UK.
“Data is expected to show CPI increasing at 2.2 per cent on a year-on-year basis, above the Bank of England’s target for the first time this year.
“However, an above-forecast release is unlikely to result in major support for the pound, with the BoE unlikely to alter monetary policy until Brexit-related uncertainty dissipates.”
Holidaymakers are encouraged to make the most of the current exchange rate and sell any spare euros.
“The downward pressure on the pound means that you’ll get a much better rate when selling in exchange for GBP,” said Paul Brewer, CEO of Currency Online Group.