The Pound Euro exchange rate rallied during trading on December 1st thanks to an extremely positive reaction to confidence about single market access after Brexit.
On the Euro’s side, a mixed performance across the board has followed manufacturing stats and unemployment data for November and October.
Pound Euro Exchange Rate Skyrockets on Brexit Hopes and US Unemployment
The Pound found itself an exceptionally strong performer during the European trading session, having been given a double dose of support.
The first boost came from Brexit Minister David Davis, who stated that the UK might be able to pay to access the EU single market after leaving the multinational union. This would offset fears of the UK being left economically isolated after Brexit, and does point more towards a less drastic ‘Soft Brexit’ being aimed for instead of the ‘Hard’ variety.
Also helping the Pound has been low demand for the US Dollar, which flopped after jobless claims posted higher than expected.
The Euro has been aided by a rising November manufacturing PMI and a surprise drop in unemployment in October, but this has failed to erase jitters among investors who are looking ahead to key Austrian and Italian votes.
Future Pound Euro Performance Dependent on Affordable Single Market Access
The Pound has recently been sent soaring by hopes that single market access could be paid for after the UK leaves the EU.
The core principle of this idea, however, goes against one of the fundamental ‘selling points’ of Brexit, which was to leave the EU and not have to pay as much, or anything, towards its upkeep.
At present, only time will tell whether the cost of single market admission is considered worthwhile. If the hypothetical price to pay rankles UK citizens in the long-run, however, the Pound may weaken under the state of being outside the EU and having to pay to maintain good trade relations with it.
Euro Turbulence Likely if Far-Right Influence Expands across EU
Looking to possible influencers of the Euro in the long-term, the single currency may be unsettled over the course of 2017 if Europe is shown to be growing more insular and Eurosceptic.
December 4th will bring the first test of Europe’s resolve to keeping the ‘EU project’ intact, with Austrian Presidential and Italian Referendum votes taking place. While the Austrian vote has been too close to call, the odds look slim of Italians voting to keep their current Europhile Prime Minister in office.
Next year, France and Germany will also be holding crucial elections, which could further erode confidence in the EU, and the Euro by extension should it look like the union of currency and countries is on the verge of breakup.
Recent Interbank Exchange Rates
At the time of writing, the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.19 and the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.84.
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