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Pound To Euro Exchange Rate Rises As Brexit Is Formally Triggered

As news broke the Article 50 letter had been delivered.

29/03/2017 12:55 | Updated 29 March 2017

The pound regained earlier losses against the Euro as Brexit negotiations were formally triggered by Prime Minister Theresa May on Wednesday afternoon.

The delivery of a letter commencing Article 50, the formal process of leaving the European Union, saw the value of the pound reach a high of 0.65 percent against the Euro to €1.1589, before declining to €1.1536.

The rise has brought the pound to a five-day high thus far, but did little to repair a longer term decline in its value.

Bloomberg
The pound to Euro exchange rate seen on a one-day graph. Sterling rose upon the formal triggering of Brexit

Bloomberg earlier reported that traders factor in political events, like the delivery of the letter triggering Article 50, to the price of sterling.

However, the pound was down marginally against the US dollar at $1.2442.

Neil Wilson, senior market analyst at ETX Capital, said: “We could be in for a rough ride today as currency traders react to the contents of the letter being delivered to Brussels and the language May uses in parliament.

Bloomberg
The pound increase 0.65 percent against the Euro to €1.1589

“And we’re in for a long period of volatility for the pound and UK assets as the Government embarks on protracted and hugely challenging Brexit negotiations.

“Markets are only a gauge though, they’re not always that great at pricing in the kind of political risk associated with Brexit.”

Nonetheless, the increase in value versus the Euro will be welcomed by those who support Brexit.

CHRIS J RATCLIFFE via Getty Images
A trader works in the City of London as Theresa May formally triggered Article 50 on Wednesday

Currency fluctuations have been blamed on price rises for goods and services purchased in both dollars and Euros.

Formal exit negotiations

PA Wire/PA Images
Prime Minister Theresa May responds to questions after she announced in the House of Commons on Wednesday afternoon

The Article 50 letter, delivered to European Council President Donald Tusk, states: “The United Kingdom wants to agree with the European Union a deep and special partnership that takes in both economic and security cooperation.

“To achieve this, we believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU.”

May said that in the case that no deal is reached and Britain leaves without a deal, “both sides would of course cope with the change”, but added: “It is not the outcome that either side should seek. We must therefore work hard to avoid that outcome.”

‘We already miss you’

PA Wire/PA Images
Britain's Ambassador to the EU, Sir Tim Barrow hand delivers May's Brexit letter to Donald Tusk (right)

Tusk told a press conference in Brussels: “There’s no reason to pretend this is a happy day - neither in Brussels or London.

“There is nothing to win in this process and I am talking about both sides. In essence, this is about damage control.”

He said his message to the UK was: “We already miss you. Thank you and goodbye.”

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This article has been refreshed and updated throughout.

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