Pound Euro exchange rate: GBP/EUR flat, pre-Christmas election to break Brexit deadlock

The pound rose on hopes that the UK will avoid crashing out of the European Union without a deal after EU leaders granted the UK a three-month “flextension”. Meanwhile, MPs began to prepare themselves for the first pre-Christmas election in close to a century as Tuesday evening saw lawmakers approve Boris Johnson’s legislation and Labour leader Jeremy Corbyn concede to a December general election. Today, the legislation will begin its passage through the House of Lords with minimal objections expected. 

Prime Minister Boris Johnson has argued the election will break the current Brexit deadlock, giving him a fresh mandate for his withdrawal agreement. 

However, markets assessed the risk associated with the election, and many investors believe the Conservatives will retain power. 

Commenting on this, European head of global research at MUFG, Derek Halpenny said: “Johnson has cross-party support and [the opposition] Labour Party has lost a fair lot of the credibility it had in the 2017 election. 

“So that’s reflected in the stability in Sterling – markets believe the Conservative party will hold on to power and have a Brexit deal agreed with the EU.”

In Eurozone news, the single currency came under pressure after the Economist Intelligence Unit (EIU) predicted four EU countries at risk of recession by the end of 2019, with one being the bloc’s powerhouse economy. 

The EIU forecast that Germany is likely to enter a formal recession when the country releases its Q3 GDP data in November. 

Added to the doom and gloom surrounding the German economic situation, unemployment in the country unexpectedly rose in October.

Commenting on this, head of Germany’s Labour Office, Detlef Scheele said: “The recent economic weakness is leaving its marks on the job market. But all in all, it still proves to be robust.”

Looking ahead to Thursday, the euro could edge down against the pound following the release of the Eurozone’s flash Q3 GDP data and preliminary inflation rate. 

The Euro is likely to slide if the bloc’s economy fails to expand as much as expected, and inflation continues to miss the European Central Bank’s (ECB) target. 

source: express.co.uk