The Euro has made significant gains against the Pound in the wake of a UK Supreme Court decision, which notably sent GBP demand plummeting against expectations.
This news may have only been the tip of the iceberg for future Pound losses, however, given that Scotland’s frustration at being forced to exit the EU against its will has only been exacerbated by the Court’s verdict.
EUR GBP Demand Rises; UK Supreme Court Decision Raises More Questions than Answers
The latest news to influence the Euro has concerned Eurozone PMI flashes for January, which have shown declines for the composite and services fields against forecasts.
Despite this handicap, the Euro Pound exchange rate has risen notably, due to unexpected GBP losses following the Supreme Court verdict on Article 50.
As predicted, the Court deemed that Parliament should hold votes on triggering Article 50, which starts the UK exit from the EU.
Less expected was the Court ruling that devolved nations – of Scotland, Wales and Northern Ireland – should not be able to veto the Article 50 vote, something that sat poorly with Scottish MPs.
Euro Gains Possible if New US Trade Policies Leave Vacuum for Eurozone Nations
The Euro could stand to advance further against the Pound if sufficient trade opportunities arise; German Vice Chancellor Sigmar Gabriel, a contender in this year’s election, has identified one such opportunity for Germany, a key Eurozone member.
Speaking in response to US President Donald Trump’s rapid fire trade decisions that risk starting a pricing war, Gabriel stated that;
‘If Trump starts a trade war with Asia and South America, it will open opportunities for us. Trump must simply recognise that the US economy often isn’t competitive, while the German (economy) is. You can see the weight of [German] economic interests. Germany should act with self-confidence and not be fearful or servile.’
If the US becomes an increasingly unattractive option for a trading partner and the Eurozone becomes the go-to source of trading, then Euro demand is expected to appreciate.
Pound Predicted to Tumble if Scottish Ire Triggers ‘IndyRef2’
The Pound has been softened against the Euro by the details of the Supreme Court verdict, but could be pushed even further down if Scottish MPs decide that not being able to veto the Article 50 vote is a step too far.
Raising fears that Scottish First Minister Nicola Sturgeon could trigger a second Scottish independence referendum has been a reactionary statement, where Sturgeon asked;
‘Is Scotland content for our future to be dictated by an increasingly right-wing Westminster government with just one MP here, or is it better that we take our future into our own hands? It is becoming ever clearer that this is a choice that Scotland must make’.
Should a second independence vote be tabled due to a lack of respect from Westminster, then the Pound is expected to crash due to the threat of not only a divorce from the EU, but also the potential breaking up of the United Kingdom.
Recent Interbank EUR GBP Exchange Rates
At the time of writing, the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.86 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.15.
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