Brexit and £-€ exchange rates

[patman post]

The euro was 66p when it was introduced. It's mostly trended upward since then, and been hovering at the upper end of a 78p to 91p band for some time now. It's possibly in for a choppy time if the spat between the EU and Trump becomes more nasty, as this is likely to affect the EU more than the UK's departure, which appears to have been accounted for.

Meanwhile, forecasts of the EU's breakup and the euro's collapse appear to be the wild prophesies of those wishing it were so...

[Ciaphas]

We have been told that the vote to leave the EU caused the pound to collapse, which it didn't quite collapse, but it was reduced in value.

The Euro was 78p before the referendum and was 85p immediately after. It has been as high as 90p.

It is now back at 85p and seems to be losing value (i.e. the £ increasing) as the likelihood of the Tories winning becomes likely.



But the Tories are taking us out of the EU? So why is the £ rising?

Is it:

1. Manipulation to achieve political ends (conspiracy stuff)

2. Just normal market forces as the EU faces difficulties.

3. The leave deal that Boris has is really remain with lipstick.

4. The markets have decided leaving is not as bad as the doomsters portrayed.



Current rate 84.4p / 1.184

None of the above.



The markets like certainty and dislike uncertainty and so they fluctuate accordingly. Boris's deal is better than a no deal so the markets will respond positively but this doesn't mean Brexit isn't a problem.



With a no deal Brexit back on the table you can expect the pound to start falling again as the end of the transition period approaches.



If remain became a likely outcome then you'd see a considerable surge in the pound since remaining in the EU is the best outcome.

[Conchúr]

We have been told that the vote to leave the EU caused the pound to collapse, which it didn't quite collapse, but it was reduced in value.

The Euro was 78p before the referendum and was 85p immediately after. It has been as high as 90p.

It is now back at 85p and seems to be losing value (i.e. the £ increasing) as the likelihood of the Tories winning becomes likely.



But the Tories are taking us out of the EU? So why is the £ rising?

Is it:

1. Manipulation to achieve political ends (conspiracy stuff)

2. Just normal market forces as the EU faces difficulties.

3. The leave deal that Boris has is really remain with lipstick.

4. The markets have decided leaving is not as bad as the doomsters portrayed.



Current rate 84.4p / 1.184

The currency exchange rate between Euro and Pound over the past few years has been one dictated by certainty, or rather a lack thereof. The trend has been that the closer the UK appeared to be veering towards a No Deal, the Pound suffered.  It's a simple mechanism of market confidence — the less confidence there is in the UK's prospects as regards Brexit, then that translates into a depression of the Pound.



The rate has become less volatile over the past few weeks purely because there is a pause in actual progress on Brexit. But even at that.....a rate approaching 85p, even if it is an improvement on 90p+, is still reflective of a markedly depressed level of confidence in the UK economy versus pre-referendum.

[Nick]

As we argued at the time, the currencies were being artificially manipulated. It's now time for the people dealing in currency to make a big wedge and as they buy GBP as fast as possible it will go back to its original value.

[Barry]

We have been told that the vote to leave the EU caused the pound to collapse, which it didn't quite collapse, but it was reduced in value.

The Euro was 78p before the referendum and was 85p immediately after. It has been as high as 90p.

It is now back at 85p and seems to be losing value (i.e. the £ increasing) as the likelihood of the Tories winning becomes likely.



But the Tories are taking us out of the EU? So why is the £ rising?

Is it:

1. Manipulation to achieve political ends (conspiracy stuff)

2. Just normal market forces as the EU faces difficulties.

3. The leave deal that Boris has is really remain with lipstick.

4. The markets have decided leaving is not as bad as the doomsters portrayed.



Current rate 84.4p / 1.184